How the Scheme Worked: Inside Information, Sold in Silence

Suthoff did not hack a system or bribe a regulator. He used a personal relationship to learn something almost no one outside Sage’s executive suite knew: the FDA was about to bury the company’s most important drug. Then he quietly unloaded his shares before the rest of the market found out.

• On June 2, 2023, the FDA sent Sage a redlined version of Zuranolone’s proposed label with every reference to MDD removed. The agency told Sage directly: “our assessment is that substantial evidence of effectiveness has not been demonstrated for the use of Zuranolone in the treatment of MDD.” It identified specific deficiencies in each clinical trial Sage had submitted.
• The following morning, June 3, 2023, an internal Sage email titled “CONFIDENTIAL – HIGHLY SENSITIVE AND MATERIAL” went out to a small group of committee members, including the insider connected to Suthoff. The email contained a link to the FDA’s comments, confirmed the MDD indication had been struck, and told recipients the information was “extremely restricted.”
• On June 5, 2023, the FDA met with Sage and business partner Company A. The FDA criticized Zuranolone’s efficacy data and, when Sage asked if there was any path to MDD approval, the answer was no, absent additional clinical data that Sage never submitted.
• On June 6, 2023, Sage’s corporate counsel sent a company-wide email closing the trading window early, citing “the stage of the FDA’s review of Zuranolone NDA.” A second email went to approximately 50 employees with direct FDA exposure, explicitly forbidding them from giving anyone so much as a “thumbs up or thumbs down” about the FDA discussions.
• The insider continued attending Zuranolone committee meetings through June 7, 2023, including sessions to discuss proposed revisions to the MDD indication.
• On the morning of June 8, 2023, Suthoff placed a single order to liquidate all of his Sage shares. Those shares had been sitting in his brokerage account for over two years. This was his only securities transaction that entire month. The timing is not a coincidence the SEC is willing to overlook.

The Non-Financial Ledger

Major depressive disorder is not a niche condition. According to Sage’s own SEC filings, approximately 21 million adults in the United States reported at least one major depressive episode in 2021. These are people who wake up every morning fighting to get out of bed, who lose jobs and relationships and years of their lives, who cycle through medications that don’t work and doctors who don’t have enough time for them. For many, a new oral treatment option approved by the FDA is not a stock ticker event. It is a reason to keep going.

Zuranolone was supposed to be that option for some of them. Sage and its business partner submitted the new drug application in December 2022, and Sage publicly announced in February 2023 that the FDA’s decision was expected by August 5, 2023. Patients, advocacy groups, and prescribers watched that calendar. The company projected MDD would represent at least 93% of Zuranolone’s market, meaning the drug was designed primarily for the millions of people in America living with depression, not just the postpartum population for which it ultimately won approval.

None of that context was available to the public on June 8, 2023, when Brian Suthoff placed his sell order. The 21 million people the drug was meant to serve had no idea the FDA had already decided. The retail investors who held Sage stock had no idea. The market did not know. What Suthoff knew, he did not earn through research or analysis or legal access to material facts. He knew because someone he owed a duty of trust and confidence told him, willingly or not, and he acted on it.

The SEC complaint does not name the insider, referring to them only as “the Insider.” That person was a senior Sage employee who sat on an internal committee with direct FDA exposure, who received the “HIGHLY SENSITIVE AND MATERIAL” email, who attended multiple restricted Zoom meetings, and who was explicitly told not to give anyone so much as a directional indication, not a thumbs up, not a thumbs down, of what the FDA was doing. Suthoff’s relationship to that person, described only as one in which Suthoff “owed a duty of trust and confidence,” is now a central question in a federal securities fraud case. Whatever that relationship was, it was close enough that Suthoff apparently learned enough to walk away from a two-year investment position in a single morning trade, six weeks before the news broke.

The $19,680 he avoided losing is not the point. That number is smaller than a used car. The point is that ordinary investors who held Sage stock on August 7, 2023, lost more than half of every dollar they had put in, while Suthoff was sitting on cash he converted at $56.11 a share. The rules that are supposed to make markets fair, the rules that say you cannot trade on secrets, exist precisely to prevent this. They did not prevent it here. They caught it, eventually, more than two and a half years later.

Legal Receipts: What the Court Documents Actually Say

These are direct quotes from the SEC’s complaint filed January 26, 2026, in the District of Massachusetts, Civil Action No. 26-cv-10350. Nothing here is paraphrased.

“The FDA also communicated to Sage that, ‘our assessment is that substantial evidence of effectiveness has not been demonstrated for the use of Zuranolone in the treatment of MDD’ and identified deficiencies in each of the clinical trials Sage had submitted in support of MDD.”

SEC Complaint, paragraph 17, describing FDA communication dated June 2, 2023

“The following morning, June 3, 2023, the members of the Committee, including the Insider, received an email titled ‘CONFIDENTIAL – HIGHLY SENSITIVE AND MATERIAL.’ The email contained a link to the FDA’s comments striking MDD from the proposed Zuranolone label, noted that the ‘[MDD] indication has been struck,’ and remarked that ‘the FDA comments are surprising and disappointing.'”

SEC Complaint, paragraph 18

“When Sage and Company A queried whether there was a path forward with respect to MDD, the FDA advised that there did not appear to be other options for securing approval for MDD absent additional data. Neither Sage nor Company A submitted any such additional data for the NDA.”

SEC Complaint, paragraph 20, describing the June 5, 2023 FDA meeting

“[Y]ou 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) to anyone inside Sage or externally who is not in this working group.”

SEC Complaint, paragraph 23, quoting second corporate counsel email sent June 6, 2023, to approximately 50 Sage employees

“Suthoff placed an order to liquidate the Sage shares he had held for more than two years. This was the only securities transaction in his brokerage account that month.”

SEC Complaint, paragraph 26, describing events of June 8, 2023

Who Was Connected to Whom: The Information Chain

Understanding how this case works requires mapping who knew what, who was supposed to keep it secret, and how the information traveled from an FDA communication all the way to a trade placed in Suthoff’s personal brokerage account.

Societal Impact Mapping

Public Health

Zuranolone’s FDA outcome directly affects access to mental health treatment for tens of millions of Americans. The downstream implications of this insider trading case reach beyond the stock market.

• Sage’s own Form 10-K filed February 16, 2023, reported that approximately 21 million adults in the United States reported at least one major depressive episode in 2021. Zuranolone was positioned as a novel oral treatment specifically for this population, and FDA approval would have expanded available treatment options for a condition that remains chronically undertreated.
• Zuranolone was approved for postpartum depression but denied for MDD, meaning the approximately 500,000 women per year Sage estimated experience postpartum depression symptoms gained access to an oral option, while the far larger MDD population did not. The regulatory failure exposed in the complaint reflects clinical trial deficiencies, not patient need.
• The 53% stock crash following the announcement damaged the financial health of Sage as a company. A company with only $7.69 million in 2022 product revenue, now deprived of the $150 million milestone payment it would have received upon MDD approval, faces severely constrained resources for future clinical research and drug development in brain health disorders.
• Insider trading events like this one erode trust in pharmaceutical stock markets. When retail investors conclude that connected insiders reliably exit before bad news, individual investors pull back from biotech and pharmaceutical sector investments, reducing the capital available for early-stage drug development that benefits patients.

Economic Inequality

This case is a textbook example of a two-tier market: one set of rules for people with powerful personal connections, a different reality for everyone else holding the same stock.

• Retail investors who held Sage stock through August 7, 2023, lost more than half the value of their investment overnight, with no warning and no access to the information that prompted Suthoff to exit. The people with the least market sophistication and the fewest alternative resources absorbed losses that a connected insider avoided entirely.
• Suthoff’s exit price of $56.11 per share compared to the post-announcement close of $16.75 represents a spread of $39.36 per share. Every investor who held through the announcement effectively subsidized Suthoff’s privileged early exit by absorbing the full force of the price drop he escaped.
• The SEC complaint notes that the $19,680 in avoided losses figures as the specific harm quantified in this case. For working-class investors, $19,680 represents months of savings. The penalty framework, which allows for disgorgement plus civil penalties, exists precisely because the dollar amounts in individual insider trading cases are often modest enough that without punitive consequences, the risk-reward calculus favors the crime.
• Suthoff’s profile as president of two private companies, one in data services and one in marketing strategy, and a prior career as a senior employee at companies acquired by public issuers, places him in a category of market participants with repeated exposure to securities law and insider trading compliance. This is not a naive first-time investor who made an uninformed mistake.

The “Cost of a Life” Metric

The number the SEC is asking Suthoff to return is specific. Translate it into what it actually represents for ordinary people.

What Now: Watchlist, Accountability, and Resistance

This case is active. Here is who is watching, what the court can do, and what you can do.

Corporate Parties and Leadership

• The SEC complaint identifies Brian J. Suthoff, age 56, of Boston, Massachusetts, as the sole defendant. He is the president of two private companies: one purporting to provide data services related to merchant trade credit customers, and one that is a marketing strategy firm.
• Sage Therapeutics is named as the relevant entity, not as a defendant. The Sage insider who served as the source of the MNPI is identified only as “the Insider” throughout the complaint; their identity is redacted. “Company A,” the business partner that filed the joint Zuranolone NDA and agreed to pay the milestone payments, is also not named.
• The complaint was signed by Martin F. Healey (Mass Bar No. 227550), Cassandra Arriaza (Mass Bar No. 669806), and Jeffrey Cook (Florida Bar No. 0647578) on behalf of the SEC’s Boston Regional Office.

Regulatory Watchlist

• SEC (Securities and Exchange Commission): Filed this complaint on January 26, 2026. Seeking permanent injunction, disgorgement with prejudgment interest, civil penalties under Section 21A of the Exchange Act, and a five-year officer/director bar. The SEC’s Boston Regional Office is the active enforcement unit. Contact: 33 Arch St., 24th Floor, Boston, MA 02110; (617) 573-8900; healeym@sec.gov.
• DOJ (Department of Justice): Parallel criminal referrals are common in insider trading cases brought by the SEC. The complaint has not confirmed a criminal referral, but the Exchange Act framework explicitly permits it. Watch the District of Massachusetts federal docket for any parallel indictment.
• FINRA (Financial Industry Regulatory Authority): FINRA monitors trading patterns on exchanges including Nasdaq, where Sage traded under ticker SAGE. Unusual trading volume preceding corporate announcements is a standard FINRA surveillance trigger that frequently precedes SEC referrals.
• FDA (Food and Drug Administration): The FDA’s communications in this case are evidence of proper regulatory process functioning. The agency flagged its concerns, issued a negative label comment, and met with the company. The drug approval system worked as designed; the breach occurred in how Sage’s internal confidential information was handled and leaked.

What You Can Do

• Report tips to the SEC Whistleblower Office: If you work in finance, pharmaceuticals, or a connected industry and have observed insider trading, the SEC Whistleblower Program at sec.gov/whistleblower offers financial awards and legal protections for original information that leads to a successful enforcement action. You do not have to be an employee of the company being investigated.
• Pressure your broker for retail market reform: Contact your brokerage and demand disclosure of their surveillance policies for detecting trades that front-run public announcements. Brokerages that actively flag and report suspicious same-account patterns to FINRA and the SEC are doing their job. Those that do not are complicit in the two-tier market.
• Support mental health policy advocacy: The patients who needed MDD treatment options had no voice in this market event. Organizations working on pharmaceutical access, mental health parity in insurance, and FDA reform need grassroots support. Local NAMI (National Alliance on Mental Illness) chapters at nami.org organize at the community level and engage directly with state and federal legislators on drug access.
• Follow the docket: Civil Action No. 26-cv-10350, District of Massachusetts. Public court filings are accessible through PACER (pacer.gov). Suthoff demanded a jury trial. The outcome of that trial, including whether the SEC proves misappropriation and what penalty the jury recommends, will set a precedent for how small-scale insider trading cases in the biotech sector are prosecuted.
• Share this story with your networks: Insider trading enforcement works on deterrence. Cases like this one only deter future misconduct if they are visible. The SEC filing is public. The complaint is linked below. Send it to people in your life who invest in pharmaceutical stocks and do not know this is the environment they are operating in.