The Securities and Exchange Commission has filed a complaint against several defendants, including three brothers, accusing them of running “pump and dump” market manipulation schemes involving two pharmaceutical companies, Olema Pharmaceuticals and Opiant Pharmaceuticals.
According to the SEC’s complaint, Saad Shoukat allegedly purchased Opiant stock after being tipped that a company was seeking to acquire the biotech, which was developing an opioid overdose treatment. When the potential acquisition stalled and Opiant’s share price declined, the SEC alleges Saad worked with his brothers, Arham Shoukat and Shahwaiz Shoukat, to artificially inflate the stock rather than absorb the loss.
The scheme allegedly involved threatening Opiant’s management to accelerate release of clinical trial data, and setting up fake domains and email addresses to distribute a fabricated press release. The false announcement, which claimed Opiant was being acquired by Hikma Pharmaceuticals, went out over Cision PR Newswire and caused Opiant’s share price to surge 29% before trading was halted. The defendants allegedly captured a roughly 30% return on their position before the halt.
The SEC separately alleges a related insider trading scheme tied to the same network of defendants, filed as part of the same broader enforcement action, in violation of Section 10(b) and Rule 10b-5 of the Securities Exchange Act.
Legal commentators have flagged the case as a notable escalation in the sophistication of pharma-sector market manipulation, moving well beyond simple trading-on-a-tip schemes into active disinformation campaigns designed to move a stock price directly. The use of a legitimate wire service to distribute fabricated acquisition news is seen as a particularly aggressive tactic that regulators are likely to treat as an aggravating factor in any eventual penalty.
The case has prompted renewed warnings to biopharmaceutical issuers about the need to monitor for unusual, unexpected, or inaccurate market reports concerning their own stock, and to have rapid-response protocols in place to correct false information before it can meaningfully move share prices — a vulnerability the Opiant case has shown can be exploited within hours.