On September 5, 2025, the U.S. Securities and Exchange Commission (SEC) brought enforcement actions against a public company and one of its executives for materially misleading statements. Although disclosure fraud cases are nothing new for the SEC, they have been a rarity thus far during the tenure of Chairman Paul S. Atkins. So, these cases – including the cooperation provision in the company’s settlement – may shed light on the current direction of SEC enforcement.

Background

In FibroGen, Inc., Securities Act Release No. 11387 (Sept. 5, 2025), the SEC brought a settled administrative proceeding against FibroGen, a biopharmaceutical company with shares traded on the Nasdaq Global Select Market. During the relevant time, FibroGen was developing a drug called Roxadustat, a potential therapy for kidney disease. Dr. Kin-Hung Peony Yu was FibroGen’s chief medical officer, and she oversaw the clinical development of Roxadustat.

Around April 2019, FibroGen received the results of certain studies regarding Roxadustat’s cardiovascular safety. The data showed that Roxadustat was non-inferior – but not superior – in cardiovascular safety to the existing treatment already on the market.

Dr. Yu and her team then conducted various analyses of the safety data using certain post-hoc factors to generate more favorable findings. Utilizing these post-hoc factors, Dr. Yu’s team engineered results showing that Roxadustat had a superior safety profile to the already-existing treatment on the market.

Based on Dr. Yu’s analyses, between November 2019 and April 2021, FibroGen made multiple public statements about the purportedly superior cardiovascular safety of Roxadustat, including at a conference, in an earnings call, and in multiple SEC filings. When this positive news was announced, FibroGen’s stock price jumped approximately 10%. During this time, however, FibroGen and Dr. Yu did not disclose that post-hoc factors had been used to affect the data.

In March 2021, Dr. Yu left FibroGen. Several weeks later, in April 2021, FibroGen issued a press release, disclosing that its previously announced results were based on post-hoc changes to the data. On the news of that corrective disclosure, FibroGen’s stock price dropped 43%.

The Settlement with FibroGen and Litigation Against Dr. Yu

On September 5, 2025, the SEC brought a settled administrative proceeding against FibroGen, charging securities fraud under Section 17(a)(2) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5(b).

Without admitting or denying the SEC’s allegations, FibroGen agreed to pay a civil penalty of $1.25 million and to “cooperate fully” with the SEC on any related judicial proceeding (like the case against Dr. Yu). In the order settling with FibroGen, the SEC acknowledged FibroGen’s cooperation with the staff’s investigation, its agreement to cooperate in the SEC’s related enforcement action, and its remedial efforts.

The SEC also filed a litigated complaint in federal district court against Dr. Yu, alleging the same securities fraud violations. See SEC v. Yu, No. 3:25-cv-7593 (N.D. Cal. filed Sept. 5, 2025). The complaint against Dr. Yu seeks a permanent injunction, disgorgement of ill-gotten gains with prejudgment interest, civil money penalties, and a bar prohibiting Dr. Yu from serving as an officer or director of a public company.

Takeaways

These enforcement actions highlight at least two key points:

First, the SEC under Chairman Atkins is willing to pursue disclosure fraud cases against public companies. Although cases against public companies have been rare thus far during Chairman Atkins’s tenure, the SEC seems open to bringing them – at least where the alleged misrepresentations have a significant impact on a company’s stock price. See also Emergent BioSolutions, Inc., Securities Act Release No. 11371 (Apr. 7, 2025); Allarity Therapeutics, Inc., Securities Act Release No. 11367 (Mar. 12, 2025). And that appears to be consistent with the SEC’s recent emphasis on protecting retail investors, who may be harmed when stock prices are affected by material misrepresentations.

Second, the cooperation provision in the settled order against FibroGen is notable. According to the order, the SEC considered both FibroGen’s cooperation with the staff’s investigation and its agreement to cooperate in the SEC’s case against Dr. Yu, including by, among other things, (a) disclosing any non-privileged information, (b) producing any non-privileged documents, and (c) agreeing to be interviewed by the SEC staff. This cooperation may have resulted in a lower monetary penalty against the company, although the SEC’s order does not make that explicit. Additionally, it remains to be seen whether this cooperation provision turned on the facts and circumstances of this case or illustrates a settlement term the SEC will seek in future cases against public companies.