SEC and FDA Formalize Information-Sharing Agreement
The pact gives the SEC a direct channel to obtain nonpublic FDA data, increasing enforcement risks for life-sciences companies regarding investor disclosures and insider trading.
The US Securities and Exchange Commission (SEC) and the Food and Drug Administration (FDA) have signed a memorandum of understanding creating a formal framework for sharing nonpublic information. The agreement is designed to enhance both agencies’ ability to execute their missions by allowing the SEC to more easily access sensitive data about FDA-regulated companies, including information on clinical trial results, product approval status, and other regulatory correspondence that could be material to investors.
Sophisticated counsel should note that this MOU streamlines the process for the SEC to build enforcement cases. The agency’s Divisions of Enforcement and Corporation Finance can now use FDA-sourced information to scrutinize public disclosures for false or misleading statements and to analyze trading data for potential insider trading violations. For life sciences and biotech companies, this elevates the importance of aligning FDA communications with investor-facing statements. Firms should review their disclosure controls, insider trading policies, and record-keeping practices for FDA interactions to mitigate this heightened regulatory risk.