Each month, we publish a roundup of the most important SEC enforcement developments for busy in-house lawyers and compliance professionals. This month, we examine:
- Settled insider trading charges against a former trader;
- A settled order against FibroGen and its Chief Medical Officer for misstating clinical-trial results for its lead drug candidate;
- An SEC complaint alleging that a former advisor misappropriated client data, made unauthorized trades, and misled investors while attempting to launch his own firm;
- A jury verdict finding an Ohio trader liable in a micro-cap fraud and manipulation case; and
- An SEC complaint alleging a $112 million fraudulent offering tied to distressed retail companies.
Additionally, on September 26, 2025, SEC Chair Paul S. Atkins announced that the Commission will once again simultaneously evaluate settlement offers in SEC enforcement actions and requests for SEC waivers from automatic disqualifications and other collateral consequences that could result from the enforcement actions, reversing a prior policy to consider such offers and requests separately. And in non-enforcement news, on September 29, 2025, the SEC’s Division of Corporation Finance issued a no-action letter to DoubleZero, Inc., stating the Division would not recommend enforcement if the company’s programmatic transfers of its 2Z token proceed without registration under Section 5 of the Securities Act or Exchange Act Section 12(g). This letter in effect indicates that the Division of Corporation Finance staff does not view the 2Z token as a security.
1. Ex-Investment Firm Trader Charged with MNPI-Related Short Selling
As we have seen in recent months, the SEC remains focused on insider trading enforcement. On September 5, 2025, the SEC filed and settled insider trading charges in the United States District Court for the District of Connecticut against Ryan Squillante, the former Head of Equity Trading at an investment firm. The complaint alleged violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, which prohibit trading securities based on material nonpublic information (MNPI) obtained in breach of a duty of trust or confidence. The SEC alleged that Mr. Squillante received MNPI about public companies as part of his job and that he used MNPI to short the stock of at least 10 public companies after learning of upcoming secondary offerings through his employment, generating approximately $216,965 in profits. Without admitting or denying the allegations, he consented to a final judgment imposing a civil penalty, disgorgement plus prejudgment interest, and a permanent injunction.
In a related DOJ action in the United States District Court for the District of Connecticut, on June 6, 2025, Mr. Squillante pleaded guilty to a single count of securities fraud under 15 U.S.C. §§ 78j and 78f, based on the same MNPI trading conduct. On October 7, 2025 Mr. Squillante was sentenced to 60 days in prison, 18 months of probation, and mandatory participation in substance abuse and mental health treatment programs, as well as being fined $331,368.
2. FibroGen Pays $1.25 Million to Settle Drug Trial Result Misstatement Charges
On September 5, 2025, the SEC filed a settled administrative proceeding against FibroGen, Inc., a San Francisco-based biopharmaceutical company. The SEC’s Order Instituting Cease-and-Desist Proceedings alleged that FibroGen and its former chief medical officer (CMO) made false or misleading statements regarding pooled cardiovascular-safety results for the company’s drug Roxadustat. The SEC also alleged that the former CMO represented that the FDA agreed with FibroGen’s statistical approach when the company had not yet discussed post-hoc changes to stratification factors with the FDA. According to the SEC, the company’s disclosures between 2019 and 2021 reflected results that incorporated post-hoc changes to stratification factors, improving apparent safety outcomes while omitting disclosure of the revised methodology. The SEC alleged FibroGen violated Section 17(a)(2) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
The company, without admitting or denying the charges, agreed to pay a $1.25 million civil penalty, cooperate in a related enforcement action, and cease and desist from committing or causing future violations.
The same day, on September 5, 2025, the SEC filed a related complaint against the former CMO of FibroGen in the United States District Court for the Northern District of California, alleging that she misled investors about Roxadustat’s safety and efficacy through misstatements in SEC filings, an earnings call, and publications. The SEC alleged the former CMO violated Section 17(a)(2) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5. The SEC seeks disgorgement, civil penalties, and injunctive relief in the form of a bar on serving as an officer or director of registered issuers.
3. SEC Alleges Former Investment Advisor and His Firm Violated Investment Advisors Act by Misusing Customer Data, Unauthorized Trading, and Misleading Investors
On September 10, 2025, the SEC filed a complaint in the United States District Court for the Central District of California against Parker Terrill Austin and his advisory firm Embarcadero Capital Advisors, Inc. (“Embarcadero”), alleging that during his employment at Firm A, Austin directed the unauthorized transfer of his employer’s clients’ non-public personal information to his personal email and, on at least one occasion, to an unauthorized third-party, his future business partner. Austin allegedly aided and abetted Firm A’s violation of Regulation S-P, which requires investment advisors to safeguard client information.
While still at Firm A, Austin allegedly placed hundreds of clients into an equity strategy not approved by the firm’s investment committee, in many instances without the client’s knowledge. Further, Austin, on at least one occasion, made investments directly contrary to client instructions, allegedly in violation of the Investment Advisors Act of 1940 sections 206(1) and 206(2), which prohibits fraudulent and deceptive conduct by investment advisors. Firm A terminated Austin, and Austin subsequently formed Embarcadero Capital Advisors, Inc. As Austin attempted to develop Embarcadero, he allegedly misrepresented the reasons for his termination to his new clients and included misrepresentations in filings with the SEC. The SEC alleges Austin and Embarcadero Capital Advisors continued to make misrepresentations even after the SEC contacted him, and Austin and Embarcadero violated Sections 206(1), 206(2), and 207 of the Investment Advisors Act. The SEC seeks permanent injunctions against Austin and Embarcadero, disgorgement with prejudgment interest, and civil monetary penalties.
4. Jury Finds Micro-Cap Promoter Liable in Fraud and Manipulation Case
On September 19, 2025, following a nine-day trial, a jury in the United States District Court for the Southern District of New York found Steven M. Gallagher, an Ohio-based trader, liable for securities fraud and market manipulation. The SEC’s complaint alleged that Gallagher engaged in “scalping,” where he accumulated positions in thinly traded micro-cap stocks, promoted them through social media posts to increase demand, and sold his holdings without disclosing his ownership or intent to sell. The SEC also alleged that he executed “marking-the-close” trades to inflate end-of-day stock prices, generating more than $2.5 million in profits.
The jury found Gallagher liable for violations of Securities Act Section 17(a) and Exchange Act Section 10(b) and Rule 10b-5.
5. SEC Charges Retail Ecommerce Ventures Founders in $112 Million “Ponzi-Like” Scheme
On September 23, 2025, the SEC filed a complaint in the United States District Court for the Southern District of Florida against Taino Adrian Lopez, Alexander Farhang Mehr, and Maya Rose Burkenroad, former executives of Retail Ecommerce Ventures LLC (REV), for an alleged “Ponzi scheme.” The complaint alleges that the defendants raised approximately $112 million from hundreds of investors through allegedly fraudulent unregistered offerings in eight REV portfolio companies, including well-known distressed retail brands, while promising outsized annual returns up to 25 percent. According to the SEC, none of the retail brands generated any profits and the defendants used other sources of funds, including at least $5.9 million in new investor funds, to pay investors. The SEC claimed that Lopez and Mehr misappropriated $16.1 million in investor funds for personal use. The SEC seeks injunctive relief, disgorgement, civil penalties, and officer-and-director bars.
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