On June 7, 2021, the Securities and Exchange Commission charged a New York couple, Chad Calice and Holly Hand, with insider trading in connection with transactions involving Neuralstem, Inc., a pharmaceutical company currently known as Palisade Bio, Inc.. The SEC alleged that Calice sold his Neuralstem shares based on a tip from Hand, a senior project manager for Neuralstem whose position included oversight of a clinical trial for one of the company’s two lead assets under development. Hand allegedly conveyed material nonpublic information to Calice upon learning of negative efficacy results from the trial, causing Calice to sell all of his Neuralstem stock the day before the company publicized the negative report. Calice also shared the tip with a relative, who also sold his Neuralstem shares ahead of the public announcement.
According to the complaint, the Neuralstem share price dropped approximately 50% after the negative results were released; by selling the stock ahead of the public disclosure, Calice allegedly avoided losses of $103,875, while his uncle avoided losses of $14,434. As a result, the SEC charged Hand and Calice with violating section 17(a) of the Securities Act of 1933, and section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder.
Both defendants have consented to the entry of final judgments against them, without admitting or denying the allegations in the complaint, and are permanently enjoined from further violations of these antifraud provisions. In separate settlements, Hand agreed to pay $103,875, and Calice agreed to pay $222,184 in civil penalties, pending the approval of the proposed settlements by the US District Court for the Southern District of New York.
SEC Press Release |SEC Complaint | Hand Settlement | Calice Settlement