Litigation Release No. 25099 / May 27, 2021
Securities and Exchange Commission v. Mohammed A. Bari, No. 21-civ-00999 (S.D. Cal. filed May 26, 2021)
The Securities and Exchange Commission today announced settled insider trading charges against Dr. Mohammed A. Bari, of Rancho Santa Fe, California, for his trading in the stock of a drug company after learning that the company was on the brink of announcing positive clinical trial results.
According to the SEC’s complaint, Bari was a medical investigator for the clinical trial of KarXT, a drug developed by Boston-based Karuna Therapeutics, Inc. for treating patients with schizophrenia. The complaint alleges that, in mid-November 2019, Karuna informed Bari that KarXT had proven safe and effective in the trial, and that Karuna planned to announce these results to the public within a few days. Karuna’s management allegedly described the KarXT trial results to Bari as a significant milestone for the company. According to the complaint, Bari began placing orders to purchase Karuna common stock within hours of learning this information, and ultimately acquired more than 1,600 shares. The complaint alleges that Karuna publicly announced the positive results on November 18, 2019, and its stock price increased by more than 440 percent, earning Bari profits of nearly $120,000 by trading in advance of that announcement.
The SEC’s complaint alleges that Bari violated the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Without admitting or denying the allegations, Bari agreed to be permanently enjoined from violating these provisions of the securities laws and to pay a penalty of $238,434. The settlement is subject to court approval.
The SEC’s investigation was conducted by Lance Jasper and supervised by Spencer Bendell in the Los Angeles Regional Office. The SEC acknowledges the assistance of the Financial Industry Regulatory Authority.