Insider Trading Scandal Rocks Pharmaceutical Industry Following Novartis-Chinook Acquisition

In a shocking development that has sent ripples through the pharmaceutical industry, five individuals have been charged in connection with a $600,000 insider trading scheme linked to Novartis' recent acquisition of Chinook Therapeutics. The U.S. Department of Justice (DOJ) announced the charges on May 23, 2025, unveiling a complex web of alleged securities fraud and conspiracy that has implicated a former director of Chinook's board.

Former Chinook Board Member at Center of Allegations

Rouzbeh "Ross" Haghighat, who served on Chinook's board until the 2023 acquisition, now faces multiple charges including securities fraud, 16 counts of insider trading, and two counts of conspiracy. The DOJ alleges that Haghighat accessed confidential information about the impending $3.2 billion Novartis-Chinook deal and subsequently shared this information with four other individuals.

The charges state that Haghighat viewed material nonpublic information about the acquisition in May 2023, including specific deal terms. He is accused of not only purchasing securities based on this inside knowledge but also tipping off Bruce Haghighat, Kirstyn Pearl, Seyedfarbod "Fabio" Sabzevari, and James Roberge. These individuals allegedly acted on the information, collectively profiting over $600,000 from securities purchases made before the buyout was publicly announced in June 2023.

Legal Ramifications and Industry Impact

The severity of the charges underscores the potential consequences faced by the accused. A conviction for securities fraud carries a maximum penalty of 25 years in prison, while each count of insider trading could result in up to 20 years of incarceration. The conspiracy charges alone could lead to a maximum 25-year prison sentence.

Eric Shen of the U.S. Postal Inspection Service Criminal Investigations Group emphasized the gravity of the situation, stating, "Ross Haghighat and his associates thought they were above the law and colored outside the lines for financial gain, but yesterday's indictment proves no one is above the law."

Fallout in the Biotech Community

The reverberations of this scandal have already begun to impact the broader biotech community. Following the public announcement of the charges, Haghighat submitted his resignation to Sernova Biotherapeutics, a cell therapy company where he had served as chair. Sernova's announcement of his departure struck a diplomatic tone, thanking Haghighat for "his service as a trusted leader" and wishing him luck in the future.

This case serves as a stark reminder of the strict regulations governing insider trading in the pharmaceutical industry, especially during high-profile mergers and acquisitions. As the legal proceedings unfold, the industry will be watching closely to see how this case may influence future corporate governance practices and regulatory scrutiny in the biotech sector.