Securities Regulation Daily Wrap Up, FRAUD AND MANIPULATION—S.D.N.Y.: Analyst Used Wall-Crossed Information to Trade Healthcare Securities, (Jun 8, 2026)
The SEC and federal prosecutors in New York allege trading on confidential healthcare-sector data, with profits exceeding $320,000.
The SEC charged an analyst and a New York-based investment adviser with insider trading in the securities of twelve healthcare companies. The Commission's complaint, and a parallel criminal indictment, charges Li with using confidential information about his employer's healthcare clients to trade in those companies' securities and realize over $320,000 in illicit profits (SEC v. Li, No. 1:26-cv-04778 (S.D. N.Y. June 5, 2026)).
Defendant Jianqing Li is an analyst at an investment adviser focusing on biomedical and healthcare investments. Li had a professional background providing familiarity with clinical drug development, and his position gave him access to confidential information about securities offerings and clinical drug data. Li's employer had agreed with its clients to keep this information secret and also had written policies prohibiting trading in healthcare securities.
"Wall-crossing." According to the complaint, between February 2024 and October 2025, Li traded while in possession of material, nonpublic information at least twelve times. On each occasion, Li's employer participated in "wall-crossing," meaning that it had agreed to receive confidential information that would be kept secret and used only to decide whether or not to participate in an upcoming securities offering. Li was included in these communications, which included information about, among other items, data from clinical drug trials, corporate transactions, and the timing and size of the offering.
Typically, after the adviser (and Li) received the confidential information, Li would trade on that information before it became public. When the issuer publicly disclosed the information, the stock price would rise or fall, and Li would close his position for a profit. Depending on the information, Li would buy shares or call options, or sell short or buy put options. He never sought clearance for these trades from his employer and never disclosed them, and his total illicit profits were approximately $327,883.
Violations. Li is charged with violating the antifraud provision of the Exchange Act. The Commission seeks a permanent injunction, disgorgement with prejudgment interest, civil penalties, and a prohibition against Li acting as or associating with an investment adviser.
Criminal action. The U.S. Attorney's Office for the Southern District of New York charged Li in a parallel criminal action. Li is charged with two counts of securities fraud, one of which carries a maximum sentence of 20 years in prison, and the other 25 years in prison.
The indictment alleges that Li used material, nonpublic information that he had misappropriated from his employer to gain over $350,000 in illicit profits. The indictment says that Li traded in the securities of approximately 20 healthcare companies starting in September 2023.
"Jianqing Li allegedly turned confidential information into more than $350,000 in illegal trading profits," said U.S. Attorney Jay Clayton. "Insider trading is unfair and it’s illegal. It harms our markets and our investors."
The case is No. 1:26-cv-04778.
Attorneys: Christopher Mario Colorado for the SEC.
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