Corporate Misconduct Accountability Project
Brian J. Suthoff / Sage Therapeutics · SEC Enforcement Action
The Insider Who Knew the Drug Would Fail
A Boston businessman used secret FDA rejection data, leaked by a Sage Therapeutics insider, to dump his stock before the company’s share price collapsed by 53%.
TL;DR
Brian Suthoff, a 56-year-old Boston businessman, obtained confidential FDA information from a senior Sage Therapeutics employee and used it to sell all his company shares before a devastating public announcement. The FDA had secretly rejected Sage’s depression drug Zuranolone for its most lucrative indication, major depressive disorder, which represented 93% of the projected market. Suthoff dumped shares he had held for over two years, avoiding $19,680 in losses. Two months later, Sage’s stock fell 53% when the news went public. The SEC filed a civil complaint against Suthoff in January 2026, seeking disgorgement, civil penalties, and a five-year bar from serving as an officer or director of any public company.
Read the full complaint to understand exactly how the tip was passed and what Suthoff knew.
53%
Sage stock price drop after announcement
$19,680
Losses avoided by Suthoff
93%
Share of target market denied by FDA (MDD)
$150M
Milestone payment Sage lost when MDD was denied
2+ yrs
How long Suthoff held shares before dumping them
$56.11
Average price Suthoff sold at (vs. $16.75 post-crash)
The Allegations: A Breakdown
⚠️
Core Allegations
What Suthoff did
| 01 | Suthoff obtained material non-public information (MNPI) from a senior Sage Therapeutics employee between June 2 and June 7, 2023, specifically that the FDA had struck all references to major depressive disorder from Zuranolone’s proposed drug label. | high |
| 02 | On June 8, 2023, Suthoff placed a sell order to liquidate every Sage share he owned. It was the only securities trade in his brokerage account that entire month. | high |
| 03 | Suthoff sold shares he had held for more than two years, at an average price of $56.11 per share, just before the stock crashed to $16.75 after the public announcement on August 4, 2023. | high |
| 04 | The SEC alleges Suthoff violated Section 10(b) of the Securities Exchange Act and Rule 10b-5 by misappropriating confidential information and trading on it in breach of a duty of trust and confidence owed to the insider source. | high |
| 05 | Suthoff knew, or recklessly disregarded, that the FDA’s decision was both material and non-public. The complaint cites his immediate sale after receiving the tip as evidence of knowing the information’s value. | medium |
🏛️
Regulatory Failures
How confidentiality controls broke down
| 01 | The Insider was subject to Sage’s written insider trading policy and its “Special Trading Procedures for Insiders,” both of which they acknowledged in writing. Despite this, the Insider shared MNPI with Suthoff. | high |
| 02 | Sage’s own corporate counsel sent two separate emails on June 6, 2023: one to all employees closing the trading window early, and a second specifically to the 50 employees involved in FDA interactions, warning them not even to give a “directional indication” about the FDA discussions. | high |
| 03 | The June 3 internal email to Committee members, including the Insider, was titled “CONFIDENTIAL: HIGHLY SENSITIVE AND MATERIAL” and explicitly called the information “extremely restricted.” The leak happened anyway. | high |
| 04 | Sage’s own insider trading policy specifically listed “information related to decisions by regulatory authorities regarding the Company’s product candidates” as an example of potentially material information requiring careful handling. | medium |
💰
Profit Over People
Personal gain at the expense of market fairness
| 01 | Suthoff walked away with $19,680 more than he would have received had he sold after the public announcement, a gain made entirely at the expense of investors who bought his shares without access to the same information. | high |
| 02 | The buyers of Suthoff’s shares on June 8, 2023, had no way of knowing the FDA had already rejected the drug’s primary indication. They paid a price reflecting hope for a $150 million milestone payment that would never arrive. | high |
| 03 | The information asymmetry was extreme: Suthoff knew the FDA had called Sage’s clinical trial data deficient across every trial submitted for the MDD indication, while the public believed approval was still possible. | medium |
📉
Economic Fallout
Financial harm to Sage shareholders and the broader market
| 01 | Sage’s stock dropped from $36.10 to $16.75 in a single trading day after the August 4, 2023 announcement: a loss of more than half the company’s market value wiped out in hours. | high |
| 02 | The FDA denial killed a $150 million milestone payment from Company A (Biogen) to Sage, which had reported just $7.69 million in total product revenue for all of 2022. The denial was an existential financial blow. | high |
| 03 | MDD constituted at least 93% of the projected market for Zuranolone. Approval for postpartum depression alone, which the FDA did grant, represented just 7% of the commercial opportunity Sage and its investors had been anticipating. | medium |
⚖️
Corporate Accountability Failures
What enforcement looks like (and what it doesn’t)
| 01 | The SEC seeks disgorgement of $19,680 plus civil penalties that could reach three times the profit avoided under Section 21A of the Exchange Act, potentially totaling nearly $80,000. For a businessman with the profile described, this is a limited deterrent. | medium |
| 02 | The SEC also seeks a five-year bar on Suthoff serving as an officer or director of a public company. This limits future damage but does not address the Insider, who is not named as a defendant in this complaint. | medium |
| 03 | The complaint identifies the tipper only as “the Insider” throughout, leaving open the question of whether the person who leaked the information will face separate legal consequences. | medium |
Timeline of Events
Dec 2022
Sage and Company A (Biogen) submit the Zuranolone New Drug Application (NDA) to the FDA, seeking approval for both postpartum depression and major depressive disorder.
Feb 6, 2023
Sage publicly announces the FDA’s target review date: August 5, 2023. Company A commits to milestone payments of $150M for MDD approval and $75M for postpartum depression approval.
Jun 2, 2023
The FDA sends Sage a redlined label for Zuranolone with all MDD references removed, and informs Sage that substantial evidence of effectiveness has not been demonstrated for MDD.
Jun 3, 2023
Committee members at Sage, including the Insider, receive an email marked “CONFIDENTIAL: HIGHLY SENSITIVE AND MATERIAL” containing the FDA’s label comments. The Insider allegedly shares this with Suthoff around this time.
Jun 5, 2023
The FDA meets with Sage and Company A, identifies deficiencies in all MDD clinical trial data, and states there is no clear path to MDD approval without additional data that was never submitted.
Jun 6, 2023
Sage’s corporate counsel sends two emails: one to all employees closing the trading window early, and a second to 50 FDA-involved employees warning them not to share any information about the review, “even a thumbs up or thumbs down.”
Jun 8, 2023
Suthoff places an order to liquidate all his Sage shares, the only trade in his brokerage account that month, at an average price of $56.11 per share.
Aug 4, 2023
After markets close, Sage and Company A announce that the FDA approved Zuranolone for postpartum depression but denied it for MDD.
Aug 7, 2023
Sage’s stock opens at $16.75, down 53% from its $36.10 close on August 4. Suthoff has avoided $19,680 in losses by selling two months earlier.
Jan 26, 2026
The SEC files a civil complaint against Suthoff in the District of Massachusetts, seeking disgorgement, prejudgment interest, civil penalties, and a five-year officer/director bar.
Direct Quotes from the Legal Record
QUOTE 1
The FDA’s rejection, in plain terms
Core Allegations
“our assessment is that substantial evidence of effectiveness has not been demonstrated for the use of Zuranolone in the treatment of MDD”
💡 This is the exact language the FDA used in its June 2, 2023 communication to Sage. It left no ambiguity about the denial. Suthoff’s source had access to this message.
QUOTE 2
The internal email that triggered the tip
Regulatory Failures
“CONFIDENTIAL: HIGHLY SENSITIVE AND MATERIAL”
💡 This was the subject line of the internal Sage email sent to Committee members on June 3, 2023. The Insider received it and then, allegedly, disclosed the contents to Suthoff.
QUOTE 3
The email describing the FDA news
Core Allegations
“the [MDD] indication has been struck” and “the FDA comments are surprising and disappointing”
💡 This is the internal email’s own language summarizing the FDA’s position. Recipients were told this information was “extremely restricted” and not to discuss it with anyone outside the working group.
QUOTE 4
No path forward, no new data submitted
Economic Fallout
“there did not appear to be other options for securing approval for MDD absent additional data”
💡 This is what the FDA told Sage and Company A at the June 5 meeting. Neither company submitted the additional data needed. Suthoff sold his shares three days later.
QUOTE 5
The trading blackout that came too late
Regulatory Failures
“Given the stage of the FDA’s review of Zuranolone NDA, we have decided to close the trading window today instead of next week”
💡 Sage’s corporate counsel sent this to all employees on June 6, 2023. By this point, the Insider had already shared the information with Suthoff. The blackout came two days after the alleged tip.
QUOTE 6
No directional hint allowed, not even a thumbs up
Regulatory Failures
“you must keep confidential and not disclose anything about these interactions with the FDA, or even give a directional indication of the nature of these discussions (even a thumbs up or thumbs down)”
💡 This second email from Sage’s corporate counsel, sent to the 50 employees in the FDA working group, was unusually explicit. It shows Sage knew the information was extraordinarily sensitive and took steps to prevent exactly what the complaint says happened.
QUOTE 7
The market stakes of MDD approval
Economic Fallout
“approximately 21 million adults in the U.S. reported at least one major depressive episode in 2021”
💡 Sage’s own SEC filings cited this figure to explain why MDD was such a massive commercial opportunity. By contrast, the postpartum depression market it did receive approval for covers an estimated 500,000 women annually.
QUOTE 8
What the tip was worth, in dollars
Profit Over People
“Suthoff avoided losses of approximately $19,680 by illegally dumping his Sage shares in advance of the Announcement”
💡 The complaint quantifies the harm precisely. Suthoff’s gain came directly at the expense of investors who purchased his shares without knowing the FDA had already effectively rejected the drug.
Frequently Asked Questions
What exactly did Suthoff do wrong?
He received confidential information from a Sage Therapeutics employee about the FDA’s rejection of the company’s depression drug, then sold all his company shares before the news went public. Using non-public information to trade securities is illegal under federal law, regardless of how small the gain.
Is this a serious case, or just a technicality?
It is a legitimate enforcement action. Insider trading laws exist to ensure all investors have equal access to material information. Suthoff’s trades were not accidental or coincidental: he sold a two-year-old position within days of receiving the tip, and it was the only trade in his account that month. The SEC views the timing and context as strong circumstantial evidence of intent.
Who is the “Insider” and will they face charges?
The complaint identifies them only as a senior Sage employee and member of a committee overseeing Zuranolone’s FDA review, to whom Suthoff owed a duty of trust and confidence. The Insider is not named as a defendant in this complaint. The SEC may be pursuing a separate action, or may be treating the Insider as a cooperating witness.
What penalties could Suthoff face?
The SEC is seeking disgorgement of $19,680 in avoided losses plus prejudgment interest, civil monetary penalties that can reach up to three times the profit (potentially around $59,000), and a five-year bar from serving as an officer or director of a public company. This is a civil, not criminal, case: no prison time is sought in this complaint.
What happened to Sage Therapeutics after the announcement?
The stock fell 53% in a single day, from $36.10 to $16.75. The FDA denial also meant Sage did not receive a $150 million milestone payment from its business partner. Given that the company had just $7.69 million in product revenue for all of 2022, the denial was a severe financial blow to the company and its remaining shareholders.
Could ordinary investors have known this was coming?
No. The FDA’s label comments and meeting discussions were strictly confidential. Sage employees were warned multiple times in writing not to share any information, not even a vague directional hint. The people who bought Suthoff’s shares on June 8, 2023 had no way of knowing what he knew.
What can I do to prevent this from happening again?
Support strong SEC enforcement funding so the agency can pursue more cases, including smaller ones like this. Contact your representatives to push for mandatory minimum penalties for insider trading and stronger whistleblower protections. If you work at a public company and witness potential securities violations, report them to the SEC’s Office of the Whistleblower at sec.gov/whistleblower, where you may be eligible for a financial award.
Why does insider trading matter if the dollar amounts seem small?
Insider trading corrodes trust in financial markets. When some participants can trade on information unavailable to others, ordinary investors are disadvantaged and markets become less efficient. The SEC enforces even small cases to signal that no one is above the law and to deter the far larger insider trading cases that often go undetected.
There is a press release about this scandal that you can find by visiting this following page: https://www.sec.gov/enforcement-litigation/litigation-releases/lr-26466
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