SEC Settles Insider Trading Case Involving Sage Therapeutics

USA: SEC Settles Insider Trading Case Involving Sage Therapeutics

The Securities and Exchange Commission announced on January 26, 2026 that it had reached a settlement with Massachusetts resident Brian J. Suthoff, who allegedly avoided losses of $19,680 by trading Sage Therapeutics, Inc. stock ahead of the company’s public disclosure of a negative FDA decision.

Background on Sage Therapeutics and FDA Review

According to the SEC complaint, in June 2023 an insider at Sage Therapeutics learned on an “extremely restricted” basis that the Food and Drug Administration had removed major depressive disorder (MDD) from the proposed label for the company’s drug candidate. The insider received confidential emails, attended committee meetings, and was placed under a special blackout period for trading Sage securities.

Alleged Misappropriation and Trade

The complaint alleges that Suthoff, who owed a duty of trust to the insider, misappropriated the non‑public information and, in the days leading up to Sage’s August 4, 2023 announcement of the FDA denial, liquidated all of his Sage shares that he had held for more than two years. Following the announcement, Sage’s share price fell 53%, allowing Suthoff to avoid the projected loss.

Legal Charges and Settlement Terms

Suthoff was charged with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b‑5. Without admitting or denying the allegations, he consented to a final judgment that includes disgorgement of $19,680.00, prejudgment interest of $3,345.67, a civil penalty of $19,680.00, and a permanent five‑year bar from serving as an officer or director of any public company.

Investigation Details

The SEC’s investigation was conducted by agents Cassandra Arriaza and Jeffrey Cook, under the supervision of Celia Moore at the Boston Regional Office. The agency also noted assistance from the Financial Industry Regulatory Authority.

Enforcement Context

This action underscores the SEC’s continued focus on insider trading violations, particularly those involving the misuse of material non‑public information related to FDA decisions that can materially affect a company’s stock price.

This report is based on information from SEC, licensed under Public Domain (U.S. Government Work). Source: Official U.S. Government release.