United States Court of Appeals 

For the First Circuit 

Nos.18-2232,18-2233,19-1910,19-1911 

United States, 

Appellee, 

v. 

SCHULTZ CHAN, a/k/a JASON CHAN; SONGJIANG WANG, 

Defendants, Appellants. 

APPEALS FROM THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF MASSACHUSETTS 

[Hon. Indira Talwani, U.S. District Judge] 

Before 

Thompson, Barron, 

Circuit Judges.*

Peter Charles Horstmann, with whom Elliot Weinstein was on 

brief, for appellants. 

Carol Head, Assistant United States Attorney, with whom 

Andrew E. Lelling, United States Attorney, Jordi DeLlano, 

Assistant United States Attorney, and Kriss Basil, Assistant 

United States Attorney, were on brief, for appellee. 

* Judge Torruella heard oral argument in this matter and 

participated in the semble, but he did not participate in the 

issuance of the panel's opinion in this case. The remaining two 

panelists therefore issued the opinion pursuant to 28 U.S.C. 

§ 46(d). 
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November 20, 2020 
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THOMPSON, Circuit Judge. Two biostatisticians employed 

by two publicly traded biopharmaceutical companies were convicted 

of securities fraud and conspiracy to commit securities fraud after 

they bought and sold shares in each other's employing companies. 

When processing their stock transactions, both were in possession 

of confidential raw data from clinical trials of drug treatments 

from the other's company. On appeal, they make several claims of 

trial and sentencing error, including challenges to: (1) the 

denial of their motions for judgments of acquittal on each count 

of conviction, (2) the denial of a motion to compel production of 

a letter, (3) the calculation method for the adjusted base offense 

level for one of the defendants, and (4) the restitution order. 

For the reasons discussed below, we affirm across the board. 

BACKGROUND 

When, as here, defendants challenge the sufficiency of 

the evidence to support their convictions, we provide our summary 

of the facts in the light most favorable to the jury's verdict. 

United States v. Charriez-Rolón, 923 F.3d 45, 47 (1st Cir. 2019). 

We use this section to paint the big picture of what happened in 

this case; we'll save some of the nitty-gritty detail for the 

discussion section below, as needed, to complete the picture as we 

tackle each issue on appeal.
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Akebia & Defendant Chan 

Akebia Therapeutics, Inc. (Akebia) is a publicly traded 

biopharmaceutical company focused on the development of treatments 

for kidney disease. Schultz Chan, one of the defendants, is a 

biostatistician who has spent his career working on clinical trials 

in biotech companies. In the summer of 2015, Akebia hired Chan to 

be its first in-house statistician; his role as Akebia's Director 

of Biostatistics started on August 17, 2015. This was an important 

time for the company; it was in the midst of closing out an 

important clinical trial of a treatment for dialysis patients with 

chronic kidney disease (known as the "11 study"). The results of 

the "11 study" would not only affect the target patient population 

but also those who had invested in Akebia by holding shares of its 

publicly traded stock.1

Three days before Chan started working at Akebia, one of 

its in-house attorneys sent an email to all Akebia's employees 

imposing a blackout period on them, effective immediately. A 

1 According to Akebia's Chief Medical Officer, there are three 

phases of clinical trials involving humans when a new treatment is 

developed. A phase 1 trial typically involves healthy volunteers 

to determine the general safety of the treatment. A phase 2 trial 

involves one- to two-hundred patients who are sick with the illness 

the new medicine is designed to treat. When a phase 2 trial 

achieves good results, then phase 3 is designed with oversight 

from the Food and Drug Administration to test the treatment with 

hundreds or thousands of patients with the target illness. The 

"11 study" was a phase 2 trial of a treatment which came to be 

known as Vadadustat. 
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"blackout period" is when a company prohibits its employees -- or 

a group of its employees -- from buying or selling its stock 

because those employees may be, or are, in possession of important 

information that has not yet been released to the public. This 

information is referred to as "material, non-public information" 

(MNPI) to those in the industry. Blackout periods are often 

imposed around the quarterly release of financial information or 

the release of clinical trial data because it prevents insiders 

from using company information which could impact stock pricing. 

Chan was part of the team responsible for analyzing the 

data from the clinical trial and delivering some key results to 

Akebia's executives, such as whether the treatment has been working 

and whether there are any red flags about the safety of the 

treatment. Data from the completed "11 study" was ready for 

analysis in the first days of Chan's employment. Akebia's 

executives needed the analyzed results from the "11 study" as soon 

as possible so they could decide how and when to release the 

results to the public and, most importantly, to Akebia's existing 

and potential investors. 

On August 19, 2015, Chan and others on his team received 

good news; the preliminary data from the "11 study" showed almost 

zero "sudden adverse effects" from the treatment tested such as 
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deaths, strokes, deep vein thrombosis, or heart attacks.2 This 

was important news because a report released the month before had 

highlighted the results from a study of the same treatment tested 

on non-dialysis patients with chronic kidney disease (the phase 2 

"7 study") in which three patients who had received the treatment 

died. That report had posited that these "safety issues" had the 

effect of "weigh[ing] down" Akebia's stock price. Akebia announced 

the full results from the "11 study" to the general public on 

September 8, 2015. 

Merrimack & Defendant Wang 

Merrimack Pharmaceuticals, Inc. (Merrimack) is a 

publicly traded biopharmaceutical company dedicated to the 

development of diagnostics and treatments for cancer. In 2013 and 

2014, Merrimack tested a treatment it had developed to prolong the 

survival of those with metastatic pancreatic cancer who were also 

undergoing chemotherapy. The development of this treatment (known 

as MM-398) had progressed to a phase 3 trial (see supra note 1), 

referred to as the NAPOLI-1 study. The NAPOLI-1 study's design 

included specific benchmarks; for instance, they needed 

approximately 405 patients to enroll in the trial and the study's 

data would close out upon the 305th patient death. Merrimack used 

press releases to communicate information about these benchmarks. 

2 One patient had suffered a heart attack. 
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For example, a press release issued on August 28, 2013, announced 

Merrimack had reached its patient enrollment goal of 405 patients 

in the NAPOLI-1 study. Merrimack also announced the results from 

the completed NAPOLI-1 study through a press release issued on May 

1, 2014, after the 305th patient had passed away in February and 

the team had analyzed the results.

Merrimack initially thought the 305th patient death 

would occur in the fall of 2013. Anticipating this milestone, inhouse counsel imposed a stock trading blackout period during the 

summer of 2013 on those who worked closely with the study. The 

blackout period was lifted in November because the study had not 

yet reached the 305th patient death, and employees were admonished 

not to trade in Merrimack stock if they were in possession of MNPI 

about the NAPOLI-1 study. A blackout period was again imposed on 

April 21, 2014, when the final data from the NAPOLI-1 study was 

available to a select few employees for analysis. As previously 

stated (but to close the chronology of events), Merrimack issued 

a press release with the final results from the NAPOLI-1 study on 

May 1, 2014. 

Enter Songjiang Wang, the other defendant in this case. 

He joined Merrimack in 2011 and, during the NAPOLI-1 study, he led 

the statistical programming group at Merrimack. Wang's role for 

the NAPOLI-1 study was to write the computer program to execute 

the data analysis plan. To accomplish this task, Wang used a 
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statistical analysis plan (SAP) which Merrimack developed as part 

of the FDA approval process. Wang had access to the NAPOLI-1 study 

data from the summer of 2013 through the duration of the study; 

this preliminary data would have been used to test the computer 

program he was writing in preparation to execute the ultimate data 

analysis once the study was over and the dataset was final. Wang 

was also part of the team who analyzed the final dataset in April 

2014. 

Where Friendship and Banking Activity and Stock Trading Meet 

And now, the defendants, Akebia, and Merrimack converge. 

The defendants met for the first time around 2008 when Chan, then 

a senior director of biostatistics at FoldRx, hired Wang as a parttime statistical programming consultant. Chan and Wang stayed in 

touch through subsequent job changes and moves around the country. 

In 2012 and 2013, Chan borrowed money from Wang to renovate real 

property Chan owned in Massachusetts and Connecticut. Rather than 

immediately spend some of the borrowed money on the property 

renovations, however, Chan invested it in stocks, including shares 

of Merrimack (where Wang worked). When Chan applied for a position 

at Akebia, Wang served as a reference for him. After Chan started 

working at Akebia, the men texted regularly and met frequently for 

lunch. 

Chan and Wang were active investors in the stock market, 

favoring shares in biopharmaceutical companies. A deep dive by 
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the government into their financial records revealed their trading 

activities as well as timing of withdrawals of cash from their 

bank accounts, and transfers of money between their own bank 

accounts and brokerage accounts. For example, between August 2013 

and March 2015, Chan purchased Merrimack shares on at least thirtyseven different occasions, with his biggest purchase on April 21, 

2014, when he placed an order to purchase 32,522 shares as opposed 

to the 2,000-10,000 shares he usually bought at one time. 

From November 11, 2013 through February 26, 2014, Wang 

withdrew between $4,000 and $7,000 in cash eight times. Between 

December 3, 2013 and February 27, 2014, Chan made seven deposits 

of $6,800 to $12,000 in cash or checks to his bank account and 

purchased shares of Merrimack on at least four days during this 

time period. He sold all of his Merrimack shares on March 2, 2015. 

A few weeks later, Chan transferred approximately $98K from one of 

his brokerage accounts to a regular bank account, then wrote a 

$84K check which he gave to Wang, who deposited it into his own 

bank account on March 26, 2015. 

In addition, Chan bought shares of Akebia's stock during 

the first week of his employment there in August 2015 and during 

a blackout period imposed by the company on its employees. Wang 

also bought shares of Akebia's stock sixteen times between August 

28, 2015 and September 4, 2015. (These dates will be important 

when we get to our discussion below.) 
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FINRA's Interest Is Piqued and the Feds Close In 

The Financial Industry Regulatory Authority (FINRA) is 

"a non-governmental organization that regulates professionals and 

firms in the securities industry," United States v. Bray, 853 F.3d 

18, 23 (1st Cir. 2017), and helps the SEC (Securities and Exchange 

Commission) enforce federal securities laws. FINRA got in touch 

with both Akebia and Merrimack soon after each company announced 

the results from the clinical trials identified above to conduct 

a routine review and to ask who knew about the trial results before 

they were publicly announced, as well as to find out if any of 

these individuals knew any of the company's stockholders. 

A couple of weeks after Merrimack's May 1, 2014 

announcement of the results from the phase 3 clinical trial of MM398, Merrimack's General Counsel sent an email to several Merrimack 

employees, including Wang, asking for information pursuant to an 

inquiry from FINRA about who was aware of the MM-398 phase 3 

results before Merrimack announced the results publicly. Wang 

replied within an hour, stating he was aware of the data from the 

NAPOLI-1 study on April 19, 2014. Three months later, Merrimack's 

General Counsel sent another email to several Merrimack employees, 

Wang included, asking each of them -- again, at FINRA's behest -- 

to review a list of names and disclose which individuals on that 

list each of the employees knew. Wang did not reply until the 

General Counsel followed up two weeks later. Wang then replied he 
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had "reviewed the list of individuals in [the] email attachment 

and couldn't recognize anyone on the list that [he] kn[e]w." The 

list included "Chan, Schultz" and "Wang, Linda" (Chan's wife, no 

relation to the defendant Wang). 

Meanwhile, over at Akebia: Two months after Akebia's 

September 2015 announcement of the results of its "11 study," the 

legal department sent an email to all Akebia employees, vendors, 

and consultants who had had access to the "11 study" data prior to 

the September 8 public announcement, asking them to complete a 

form, per a request from FINRA, disclosing whether they knew any 

of the people on a list attached to the request. Chan responded 

within an hour, declaring he didn't know anyone on the attached 

list. The list included an entry for "Wang, Songjiang." Within 

half an hour of responding to this request, Chan sent a text 

message to Wang asking if he would be in his office that day. Wang 

replied: "No, work from home today. Find some time next week." 

The feds first approached and interviewed Chan in June 

2016. Chan admitted he had bought Akebia stock after receiving 

the "11 study" data in August 2015. Chan also told the agents who 

interviewed him that the $84,143.98 check he had given to Wang was 

to repay him for the loaned money for the property renovations in 

Connecticut. The feds likewise interviewed Wang in June 2016. 

Wang initially denied loaning money to Chan, but then stated he 

had loaned money to Chan for a real estate transaction in Texas 
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which Chan had repaid in cash. According to the FBI special agent 

who arrested Wang in February 2017, while in transport post-arrest 

Wang said: "If I was smart, I wouldn't have done this." 

Indictment and Trial 

The defendants were ultimately indicted and tried on 

four counts of securities-related violations: 

1. The defendants conspired to commit securities fraud, which 

violated 18 U.S.C. § 371 (Count One); 

2. The defendants committed securities fraud in and around April 

2014 culminating in Chan's purchase and sale of Merrimack 

shares after receiving MNPI from Wang, which violated 15 

U.S.C. §§ 78j(b), 78ff(a), as well as 17 C.F.R. § 240.10b-5 

(Count Two); 

3. The defendants committed securities fraud in and between 

August 2015 and September 2015 resulting in Wang's purchase 

and sale of Akebia shares after receiving MNPI from Chan, 

which violated the same laws as Count Two (Count Three); and 

4. Chan committed securities fraud in and around August 2015 

when he purchased and sold shares of Akebia stock after he 

came into possession of MNPI from Akebia (Count Four). 

In the pretrial proceedings, the defendants asked the 

district court to force the government to turn over an 

investigative referral letter FINRA sent to the SEC. A magistrate 

judge denied the motion to compel production, concluding it was 

irrelevant because "the government ha[d] already produced all of 

the corresponding exhibits and attachments on which the FINRA 

investigative referral letter [was] based, and the letter itself 

therefore [was] not likely to contain any new information the 

defendants [did] not already have." 
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The defendants were tried by a jury over ten days in 

June and July 2018. Several colleagues and executives from Akebia 

and Merrimack who worked with Chan or Wang testified. 

Chan also took the stand (Wang opted not to, as was his 

right); during his testimony he offered various assertions 

relevant to the issues presented for our review on appeal. He 

denied giving MNPI to Wang or receiving any from him. Chan 

testified he had been investing in the stock market for fifteen 

years and developed a daily morning routine of reading through 

news online about biotech and pharmaceutical companies, checking 

stock prices while he drank his morning coffee. He stated he used 

publicly available information about biotech companies, found on 

company websites, in reports filed with the SEC, and in medical 

journal articles, to learn about the drugs under development and 

to help him decide where and whether to invest. With respect to 

Wang, Chan testified he borrowed money in several installments for 

renovations to property in Boston and Connecticut -- approximately 

$80,000 in total -- but he ended up using much of the borrowed 

money to purchase shares in Merrimack stock instead. Chan claimed 

he paid the loan back, with interest, by check. 

With respect to Akebia and Merrimack stock, Chan 

admitted he purchased Akebia stock three times in August 2015, 
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using limit orders3 on August 19 and 21, but he denied having had 

MNPI at the time he made these stock purchases. Chan also admitted 

to placing a limit order on Merrimack stock which went through on 

April 21, 2014. Chan testified that the flurry of text messages 

to Wang in the days and weeks after Chan started working at Akebia 

was simply to coordinate a time to have lunch and so Chan could 

thank him for serving as a reference for his job application at 

Akebia. 

Before the jury began its deliberations, the defendants 

properly moved twice for judgments of acquittal, which the district 

court eventually denied in writing after entertaining memoranda 

and oral argument from the parties. The jury found Wang and Chan 

guilty of conspiracy to commit securities fraud and all counts of 

securities fraud with which they were charged. The district court 

imposed a 36-month sentence of incarceration on Chan (more on the 

court's sentencing calculus in a moment) and ordered him to pay 

$153,428.72 in restitution to Akebia. As for Wang, the district 

court ordered him to serve six months in prison and pay $17,047.64 

in restitution to Akebia. 

3 A "limit order" is an order to buy shares within specific 

parameters, such as below a certain price per share, or a specific 

number of shares, or shares up to a specified price. See Bray, 

853 F.3d at 23 n.2. 
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DISCUSSION 

The defendants claim four separate errors on appeal, 

three of which pertain to both and one of which pertains only to 

Chan: 

 Denying their motions for judgments of acquittal of each count 

of conviction; 

 Denying their motion to compel production of a letter from 

FINRA4 

4 The defendants also assert the district court erred by not 

granting a posttrial motion to compel production of the grand jury 

testimony and exhibits which they had asked for during the 

sentencing phase of their case because they wanted "greater clarity 

as to what evidence and facts were presented to the Grand Jury as 

to the time frame of the MM-398 study and Wang’s possession of 

MNPI." In particular, the defendants were still after the FINRA 

"reports, referrals and records." The Government filed an 

opposition to the motion, but it was never resolved; the district 

court did not enter an order ruling on the motion. 

As part of their appellate arguments before us, the defendants 

state, in a conclusory manner without any developed argument, that 

they showed a particularized need for the "grand jury minutes . . . 

related to the MM-398 timeline" because, after trial and before 

sentencing, the defendants wanted to "clarify the prejudicial 

variance for count 1" and the "interest of justice far outweighs 

any need for continuing grand jury secrecy in this case." Setting 

aside the lack of developed argument on this point for a moment, 

without a ruling from the district court this claim of "error" is 

not ripe for our review. Shea v. United States, 976 F.3d 63, 82 

(1st Cir. 2020) ("[W]e generally do not rule on questions -- 

whether of fact or of law -- until a district court has done so, 

a practice that enhances the quality of our decisions both by 

allowing us to consider the district court's analysis and by 

allowing the parties to hone their arguments before presenting 

them to us." (quoting Moore v. United States, 871 F.3d 72, 79 (1st 

Cir. 2017))). And in any event, the arguments before us are 

perfunctory and undeveloped, so the issue is waived. See Rodríguez 

v. Municipality of San Juan, 659 F.3d 168, 175 (1st Cir. 2011) 

("It should go without saying that we deem waived claims not made 

or claims adverted to in a cursory fashion, unaccompanied by 

developed argument."); Holloway v. United States, 845 F.3d 487, 

491 n.4 (1st Cir. 2017) (stating an argument was waived when party 

failed to provide any legal citations to support its argument). 
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 Calculating Chan's adjusted base offense level using the 

market value of the stocks after the public information about 

the clinical trials had been released to the public; and 

 Awarding restitution to Akebia. 

We will take each issue in turn. 

A. The Securities Exchange Act 

Before we tackle the motions for judgments of acquittal 

as to the conspiracy and securities fraud convictions, let's go 

over a quick primer on this area of the law. 

"The unlawful trading in securities based on material, 

nonpublic information, or illegal insider trading, is a wellestablished violation of Section 10(b) of the Securities Exchange 

Act . . . and the [SEC's] Rule 10b-5." Bray, 853 F.3d at 24 

(citing Salman v. United States, 137 S. Ct. 420, 423 (2016)). 

"Section 10(b) of the Securities Exchange Act of 1934 and the 

Securities and Exchange Commission's Rule 10b–5 prohibit 

undisclosed trading on inside corporate information by individuals 

who are under a duty of trust and confidence that prohibits them 

from secretly using such information for their personal 

advantage." Salman, 137 S. Ct. at 423 (citing 15 U.S.C. § 78j(b) 

(prohibiting the use, "in connection with the purchase or sale of 

any security," of "any manipulative or deceptive device or 

contrivance in contravention of such rules as the [SEC] may 

prescribe") and 17 C.F.R. § 240.10b–5 (forbidding the use, "in 

connection with the sale or purchase of any security," of "any 
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device, scheme or artifice to defraud," or any "act, practice, or 

course of business which operates . . . as a fraud or deceit")). 

"The purpose of the Exchange Act and complementary SEC regulations 

is 'to insure honest securities markets and thereby promote 

investor confidence.'" United States v. McLellan, 959 F.3d 442, 

457 (1st Cir. 2020) (quoting Chadbourne & Parke LLP v. Troice, 571 

U.S. 377, 390 (2014)). 

[T]he Supreme Court has recognized two 

theories of insider trading liability: the 

"classical theory" and the "misappropriation 

theory." The classical theory generally only 

imposes liability when a trader or tipper is 

an insider of the traded-in corporation. The 

classical insider-trader thus breaches a 

fiduciary duty owed to the corporation's 

shareholders. The misappropriation theory, 

however, creates liability when a tipper or 

trader misappropriates confidential 

information from his source of the 

information. The misappropriator thus 

breaches a fiduciary duty owed to the source. 

S.E.C. v. Rocklage, 470 F.3d 1, 5 (1st Cir. 2006). 

B. Motions for Judgments of Acquittal 

According to the defendants, they were entitled to 

judgments of acquittal on all of the charges in the indictment: 

The conspiracy to commit securities fraud count because the 

evidence the government presented at trial varied prejudicially 

from the allegations in the indictment and the substantive 

securities fraud counts because there was not enough evidence at 

trial from which the jury could have found they were guilty beyond 
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a reasonable doubt. Because the defendants made the same arguments 

before the district court (therefore preserving this legal issue 

for our review), our task is to consider afresh their arguments 

about why they say they are entitled to judgments of acquittal. 

See Charriez-Rolón, 923 F.3d at 51. That is, we give no deference 

to the district court's assessment of the same arguments when it 

evaluated the defendants' motions for judgments of acquittal. Id. 

Conspiracy Conviction 

Count One of the operative indictment at trial (the 

second superseding indictment or SSI) charged the defendants with 

an illegal conspiracy "[b]eginning no later than November 2013 and 

continuing through at least September 2015" to commit securities 

fraud.

The defendants don't attack the conspiracy conviction in 

a conventional "there isn't enough evidence to support my 

conviction" manner. Instead, they frame their challenge as an 

impermissible variance from the allegations in the SSI. Broadly 

speaking, they accuse the government of proving a conspiracy of 

which they had no notice, i.e., a conspiracy that started earlier 

than that alleged in the SSI, as well as of proving separate 

conspiracies rather than the single conspiracy alleged in the SSI. 

Not surprisingly, the government disagrees with all of the 

defendants' arguments, as we discuss below. 
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"A variance occurs when the crime charged remains 

unaltered, but the evidence adduced at trial proves different facts 

than those alleged in the indictment." See United States v. 

Dellosantos, 649 F.3d 109, 116 (1st Cir. 2011) (quoting United 

States v. Mangual–Santiago, 562 F.3d 411, 421 (1st Cir. 2009)). 

"A variance alone, however, does not necessitate disturbing a 

conviction; rather, 'a variance is grounds for reversal only if it 

is prejudicial . . . .'" Id. (alteration omitted) (quoting 

Mangual–Santiago, 562 F.3d at 421). "Put differently, 'so long as 

the statutory violation remains the same as that alleged in the 

indictment, the jury can convict even if the facts are somewhat 

different than charged -- so long as the difference does not cause 

unfair prejudice.'" Id. (alteration omitted) (quoting United 

States v. Wihbey, 75 F.3d 761, 774 (1st Cir. 1996)). We have 

previously identified at least three ways in which a variance may 

cause unfair prejudice (also often referred to as affecting a 

defendant's substantial rights): 

First, a defendant may receive inadequate 

notice of the charge against him and thus be 

taken by surprise at trial. Second, a 

defendant may be twice subject to prosecution 

for the same offense. Third, a defendant may 

be prejudiced by "evidentiary spillover": the 

"transference of guilt" to a defendant 

involved in one conspiracy from evidence 

incriminating defendants in another 

conspiracy in which the particular defendant 

was not involved. 

Id. at 125 (quoting Wihbey, 75 F.3d at 774). 
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For its part, the district court concluded there was a 

variance from the indictment because the SSI alleged Wang possessed 

MNPI from three separate clinical trials at Merrimack before the 

company released the results of each of these trials to the public, 

but the government only introduced evidence related to the NAPOLI1 study ending in 2014 described above. The district court decided 

(and the government agrees) this variance was not prejudicial to 

the defendants because the testimony at trial was consistent with 

the SSI allegation that the conspiracy began in November 2013 and 

this start date alleged in the indictment put the defendants on 

notice for purposes of preparing to defend against the charged 

offenses. 

Upon de novo review, we agree with the district court. 

Here's why: 

There is no dispute the government only focused its 

presentation of the evidence on one of the three Merrimack clinical 

trials referenced in the SSI. The evidence admitted at trial 

focused on the milestone dates related to the NAPOLI-1 study and 

the government did not make any attempt to prove Wang perpetrated 

securities fraud using MNPI from the other two clinical trials 

Merrimack was running around the same time and mentioned in the 

SSI.5 Herein lies the variance. See id. at 116 (defining a 

5 In the SSI, the government alleged Wang had access to the 

data from two separate clinical trials testing cancer treatments 
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variance as "crime charged remains unaltered, but the evidence 

adduced at trial proves different facts than those alleged in the 

indictment" (quoting Mangual-Santiago, 562 F.3d at 421)). 

Moreover, as the government points out, the evidence with respect 

to the part of the conspiracy involving Merrimack proved a narrower 

conspiracy than that alleged in the SSI because the government did 

not opt to focus its evidentiary presentation on two of the 

clinical studies referred to in the SSI. The proof of a narrower 

conspiracy than that alleged in an indictment does not create a 

prejudicial variance. See United States v. Mubayyid, 658 F.3d 35, 

54 (1st Cir. 2011). 

The defendants argue the district court erred by 

concluding they were not prejudiced by the variance, contending 

the prejudice arises in part from the lack of notice in the SSI 

that they would specifically be defending against Wang's alleged 

misuse of the MNPI from the NAPOLI-1 study starting with what Wang 

had in his possession in November 2013. They also assert the 

unrelated to MM-398 (the treatment tested in the NAPOLI-1 study), 

the results of which were announced publicly during the alleged 

scope of the conspiracy: (1) a phase 2 trial -- Merrimack 

announced the results to the public in November 2013, and (2) a 

phase 1 trial -- Merrimack announced the results to the public in 

December 2013. One of Merrimack's Vice Presidents testified at 

trial that Merrimack released good results from a phase 2 trial 

for "MM-121" on November 26, 2013, as well as favorable results 

from a phase 1 trial for "MM-302" on December 13, 2013. Other 

than this testimony and the two relevant press releases, these two 

treatments did not factor in to the government's evidentiary 

presentation to prove the charges against the defendants. 
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prejudicial variance allowed "otherwise inadmissible evidence of 

[their] banking transactions to prejudice the jury's consideration 

of all offenses." But we perceive no prejudice to the defendants 

because they clearly had adequate notice of the conspiracy with 

which they were charged: In more than one section, the SSI alleged 

a conspiracy began in November 2013 and did not limit this 

timeframe to one or more of the three clinical trials the SSI 

included in its general allegations. See Dellosantos, 649 F.3d at 

125 (stating defendants may be unfairly prejudiced by variance if 

taken by surprise at trial due to inadequate notice of the charge 

against them). For this reason, too, the defendants were not 

deprived of the ability to challenge the admission of banking 

transactions that precede what they consider to be the proper start 

date for any misconduct in regard to the NAPOLI-1 study. 

We also note that, even if we agreed with the defendants 

regarding the variance to the conspiracy for the securities fraud 

offense related to Merrimack, they have not alleged any variance 

from the allegations regarding the scheme as to the purchase of 

shares of Akebia's stock. Therefore, the conspiracy conviction 

would remain in place. 

The defendants also argue judgments of acquittal are 

warranted because the SSI alleged a single conspiracy to commit 

securities fraud for both companies but the evidence at trial 

varied by supporting two separate and distinct conspiracies. We 
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examine a defendant's claim of variance from the specifically 

charged conspiracy in terms of evidentiary sufficiency. See id. 

at 116; United States v. Niemi, 579 F.3d 123, 127 (1st Cir. 2009) 

("Whether evidence shows one or many conspiracies is a question of 

fact for the jury and is reviewed only for sufficiency of the 

evidence."). "Three factors guide our assessment of whether the 

evidence was sufficient to prove that a set of criminal activities 

constituted a single conspiracy: '(1) the existence of a common 

goal, (2) overlap among the activities' participants, and (3) 

interdependence among the participants.'" United States v. OrtizIslas, 829 F.3d 19, 24 (1st Cir. 2016) (alteration omitted) 

(quoting United States v. Paz–Alvarez, 799 F.3d 12, 30 (1st Cir. 

2015)). A single conspiracy "does not require the participants to 

. . . [have] participate[d] in each aspect of the conspiracy." 

Id. at 24-25 (emphasis omitted) (quoting Dellosantos, 649 F.3d at 

118). 

For its part, the district court concluded these three 

factors were met by the evidence and there was sufficient evidence 

to support a single conspiracy with multiple crimes. We agree. 

The evidence of the defendants' common goal to profit from their 

employers included their individual investments in the stock of 

each other's employers soon after each was in possession of 

critical data (MNPI) about clinical trials and their specified 

knowledge and skills to know how the results of the trials would 
- 24 - 

affect the stock prices of each defendant's employer. This 

evidence points to the common goal of using confidential 

information from each's employer to make strategic transactions of 

shares of stock but using each other to execute the actual stock 

orders to avoid company policy violations. See id. at 25; MangualSantiago, 562 F.3d at 421. The overlap of the defendants' 

activities is demonstrated through this same evidence: Each was 

needed to achieve the goal of profiting from their investments in 

shares of both Akebia and Merrimack stock. The defendants' 

activities were interdependent on one another because "the 

activities of one aspect of the scheme [we]re necessary [and] 

advantageous to the success of another aspect of the scheme." 

Mangual-Santiago, 562 F.3d at 422 (quoting United States v. 

Portela, 167 F.3d 687, 695 (1st Cir. 1999)). We hold, therefore, 

there was sufficient evidence to prove a single conspiracy. 

The defendants also argue that this purported variance 

resulted in spillover prejudice on the counts related to Merrimack 

which stemmed from the evidence presented regarding the Akebiarelated charges and this prejudice -- they say -- affected their 

rights to a fair trial. Specifically, the defendants contend 

Wang's bank withdrawals and the $84K check paid by Chan to Wang 

would not have been admitted had there been a separate Akebia trial 
- 25 - 

(which begs the question since no one asked for one).6 The 

government, in response to the defendants' arguments about 

spillover prejudice, states there was no transference of guilt to 

one defendant from evidence incriminating the other because there 

is ample evidence to support the convictions against each defendant 

based on their individual actions and statements in connection 

with the single conspiracy that was charged.

The concern we have expressed in the past about prejudice 

stemming from "evidentiary spillover" or guilt transference from 

one defendant to another can be found in cases with multiple 

defendants and multiple conspiracies in which one defendant 

allegedly may not be involved at all in one of the conspiracies, 

but may suffer from the evidence in support of the other defendants 

in those other conspiracies. See Dellosantos, 649 F.3d at 125 

(vacating the defendants' convictions on the basis of a prejudicial 

variance resulting from both evidentiary spillover and lack of 

adequate notice). Here, there could be no evidentiary spillover 

6 The defendants imply the evidence about Wang's cash 

withdrawals, which began in November 2013, would not have been 

admissible if the counts in the indictment had been severed and 

tried separately because the probative value would have been 

outweighed by the prejudicial effect. There is no indication, 

however, that the defendants attempted to sever the counts or have 

each defendant tried separately. The district court said as much 

when it addressed the same argument in its decision denying their 

motions for judgments of acquittal. As such, any musings about 

what might have happened if the charges or defendants had been 

tried separately are speculation and carry no weight with us. 
- 26 - 

because there was evidence to support the two (and only two) 

defendants' involvement in the offenses perpetrated in furtherance 

of the single charged conspiracy. 

Each of the arguments the defendants made to challenge 

their convictions for conspiracy fails.7 We therefore affirm the 

district court's decision to deny the defendants' motions for 

judgments of acquittal on Count One. 

Securities Fraud Convictions 

Now that we've explained our affirmance of the 

defendants' conspiracy convictions, we move on to discuss their 

evidentiary sufficiency challenge to their §§ 78j(b) and 78ff(a) 

7 The defendants also state a couple of claims in a summary 

fashion, without any attempt to develop the arguments. For 

example, they say the district court failed to instruct the jury 

on the specific start and end date of the conspiracy and this 

created further prejudice from the claimed variance. The 

defendants did not raise this concern with the district court and 

do not tell us either how they were prejudiced by this supposed 

error or where our case law says this matters. The argument is 

therefore waived. See Rodríguez, 659 F.3d at 175. 

The defendants also assert, for the first time in their brief, 

that a constructive amendment to the SSI occurred at trial because 

the government presented evidence of a conspiracy with respect to 

the results from the NAPOLI-1 study beginning in November 2013. A 

constructive amendment differs in focus from a prejudicial 

variance, see United States v. Valdés-Ayala, 900 F.3d 20, 36-37 

(1st Cir. 2018), and while the defendants define the concept and 

mention it a couple of times, they do not provide any argument or 

case law about how the evidence the government presented at trial 

constituted a constructive amendment from the SSI (as opposed to 

their arguments with respect to the variance). Merely stating 

this issue without any developed argument is insufficient to 

warrant our exploration of the claim here. See Holloway, 845 F.3d 

at 491 n.4. 
- 27 - 

securities fraud convictions. To complete our review, we 

"consider[] all the evidence, direct and circumstantial, in the 

light most favorable to the prosecution, draw[] all reasonable 

inferences consistent with the verdict, and avoid[] credibility 

judgments, to determine whether a rational jury could have found 

the defendant[s] guilty beyond a reasonable doubt." United States 

v. Negrón-Sostre, 790 F.3d 295, 307 (1st Cir. 2015) (quoting United 

States v. Agosto-Vega, 617 F.3d 541, 548 (1st Cir. 2010)). As a 

reminder, both defendants were convicted of securities fraud for 

Chan's trades in Merrimack stock and Wang's trades in Akebia stock. 

Chan was also convicted of securities fraud for his own trades in 

Akebia's stock. 

The defendants generally focus their arguments about 

these three counts on the absence of enough evidence presented at 

trial to prove they possessed MNPI about the relevant clinical 

trials at their respective companies close in time to the records 

of communication between them and their securities-trading 

activities. Indeed, this is where the timeline of events and 

specific dates we summarized many pages ago really comes into play: 

The defendants insist too much time passed between 

 the dates associated with the evidence about possession of 

MNPI at the time of the trades in Akebia's and Merrimack's 

securities, 

 the dates they allegedly had access to MNPI, 

 the dates of communication between them, and 

 the dates of their trading activities 
- 28 - 

for a jury to conclude they were guilty beyond a reasonable doubt 

of securities fraud.

As we mentioned at the beginning of this discussion, 

there are two theories of insider trading, classical and 

misappropriation, both of which are at play with the defendants' 

convictions here. "Under the 'traditional' or 'classical theory' 

of insider trading liability, § 10(b) and Rule 10b–5 are violated 

when a corporate insider trades in the securities of his 

corporation on the basis of material, nonpublic information." 

United States v. McPhail, 831 F.3d 1, 10 n.4 (1st Cir. 2016) 

(quoting United States v. O'Hagan, 521 U.S. 642, 651-52 (1997)). 

Under a misappropriation theory of securities fraud, the 

government has to prove the defendants committed "fraud 'in 

connection with' a securities transaction, . . . [by] 

misappropriat[ing] confidential information for securities trading 

purposes, in breach of a duty owed to the source of the 

information." United States v. Larrabee, 240 F.3d 18, 21 (1st 

Cir. 2001) (quoting O'Hagan, 521 U.S. at 652-53). "[I]ndividuals 

entrusted with confidential information about a corporation cannot 

'secretly use such information for their personal advantage,' even 

when they do not owe any direct fiduciary duty to that corporation 

or its shareholders." Bray, 853 F.3d at 25 (quoting Salman, 137 

S. Ct. at 423). 
- 29 - 

When evaluating whether a tipper derived a 

personal benefit from his or her tip, we 

"focus on objective criteria, i.e., whether 

the insider receives a direct or indirect 

personal benefit from the disclosure, such as 

a pecuniary gain or a reputational benefit 

that will translate into future earnings." 

However, a personal benefit can "often" be 

inferred where "a relationship between the 

[tipper] and the recipient . . . suggests a 

quid pro quo from the latter, or an intention 

to benefit the particular recipient." 

Id. at 26 (alterations in original) (citation omitted) (quoting 

Dirks v. S.E.C., 463 U.S. 646, 663-64 (1983)). 

Chan's Merrimack Trades Using MNPI from Wang 

Here's what the evidence at trial, considered in the 

light most favorable to the prosecution, tells us about the 

defendants' activities leading up to Chan's trades in shares of 

Merrimack stock. Bruce Belanger, a biostatistician and head of 

Biometry at Merrimack, worked with Wang from 2011-2016 and was his 

manager. Belanger testified Wang received raw data from the 

NAPOLI-1 study every month from the fall of 2013 through April 

2014 even though the biometrics team would only officially analyze 

the data when it was final at the end of the study. According to 

Belanger, Wang would have used this monthly data drop to develop 

the ultimate statistical computer program; a program their team 

would use to process the final results from the study. Belanger 

was not aware of any other data sets Wang might have used to test 
- 30 - 

the program Wang was developing for the analysis of the final 

results. 

The government's investigation into Chan's trading 

activity revealed Chan traded frequently in shares of Merrimack 

stock from August 2013 through April 2014. Chan's largest purchase 

of shares, however, occurred on April 21, 2014, two days after the 

biometrics team (which included Wang) received the last of the raw 

data, analyzed it, and celebrated the good results with champagne. 

Chan also placed an order to buy shares on April 28, 2014, again 

before the good results of the study went public on May 1. 

The government's investigation also revealed Wang 

withdrew chunks of cash from one of his bank accounts, in $4,000 

to $7,000 increments, eight times between November 2013 and March 

2014. Between December 2013 and March 2014, Chan made cash and 

check deposits into one of his bank accounts in $10,000 to $19,800 

increments. In this same time period, Chan bought shares of 

Merrimack stock twenty times using a few different brokerage 

accounts. 

This summary of the evidence is enough to drive our 

analysis about whether there was enough to support the defendants' 

convictions on this count of securities fraud. As the parties 

know well, we have previously listed and applied six factors to 

guide our examination of whether there was sufficient evidence to 

support a conviction for securities fraud under the 
- 31 - 

misappropriation theory: "(1) access to information; (2) 

relationship between the tipper and the tippee; (3) timing of 

contact between the tipper and the tippee; (4) timing of the 

trades; (5) pattern of the trades; and (6) attempts to conceal 

either the trades or the relationship between the tipper and the 

tippee." Larrabee, 240 F.3d at 21-22. 

During oral argument, the defendants stated each 

Larrabee factor identified above should be given "equal 

consideration" and each factor is weaker in their case than when 

considered against the facts in Larrabee. In Larrabee, the 

evidence at trial showed the defendant called his stockbroker and 

instructed a purchase of shares one minute after receiving an email 

from an individual with MNPI at the company in whose stock the 

defendant was investing. Id. at 20. We held there was sufficient 

evidence to support Larrabee's conviction. Id. at 24-25. Chan 

and Wang assert the reasonable doubt as to their culpability lays 

in the days which passed between their supposed receipt of the 

MNPI, the communication between them, and the purchase of shares 

of either the Akebia or Merrimack stock. In their view, our 

holding in Larrabee should preclude affirming their convictions 

for securities fraud related to Chan's trades in Merrimack stock 

because the evidence admitted at trial was "too far attenuated" 

from the timing of the activities in Larrabee. The defendants 

urge us to declare the facts in Larrabee to be the "absolute 
- 32 - 

limit[]" of the applicability of circumstantial evidence to the 

time between obtaining MNPI and the alleged use of it to trade in 

securities. We decline to do so. 

When we examine the evidence in this case, we find each 

of the six Larrabee factors is in fact met, especially given the 

uphill climb the defendants have when moving for a judgment of 

acquittal because we examine the evidence in the light most 

favorable to the prosecution. See Negrón-Sostre, 790 F.3d at 307. 

First, Wang clearly had access to MNPI for the NAPOLI-1 

study; his response to the initial FINRA request reflected he had 

MNPI on April 19, 2014. In addition, Belanger testified Wang would 

have used raw monthly data while Wang developed the analysis 

program. The final statistical analysis plan (SAP) for the NAPOLI1 study, admitted as an exhibit at trial, is clear that access to 

the data would be "strictly controlled by the Merrimack biometrics 

team"; limited to "authorized personnel for specified data 

review." And since Wang was a member of the biometrics team, the 

jury could have reasonably concluded he was one of the authorized 

individuals for data review, especially in combination with his 

manager's testimony. The raw data did not hide whether any given 

patient was receiving the treatment being tested in the NAPOLI-1 

study; it is therefore reasonable to infer Wang could have used 

the monthly raw data drop to run some preliminary analysis to gauge 

how the treatment fared on the study's subjects in addition to 
- 33 - 

testing the statistical analysis program he was responsible for 

developing. Regardless of what Wang did or did not do with the 

monthly data from November 2013 until April 2014, there is no 

dispute he was in possession of the final raw data on April 19, 

2014 (as Wang himself provided this date to Merrimack's general 

counsel in an email),8 and the results of the NAPOLI-1 study were 

not disclosed to the public until May 1, 2014.9 

8 Remember, Chan bought Merrimack stock on April 21 and 28, 

2014. 

9 We pause for a quick aside to address a discussion that came 

up not stochastically during oral argument. While the defendants 

in their papers do not develop any argument about whether the data 

Wang received was material, non-public information, there was 

extensive discussion at oral argument about whether the data Wang 

received actually contained any information that could have given 

anyone an edge in deciding whether and when to trade in Merrimack 

stock. 

Information is material "if there is 'a substantial 

likelihood that a reasonable shareholder would consider it 

important in deciding how to vote.'" S.E.C. v. Happ, 392 F.3d 12, 

21 (1st Cir. 2004) (quoting TSC Indus., Inc. v. Northway, Inc., 

426 U.S. 438, 449 (1976)). Materiality is a fact-specific inquiry, 

asking whether the information at issue "would have been viewed by 

the reasonable investor as having significantly altered the 'total 

mix' of information made available." Id. at 21 (quoting Basic 

Inc. v. Levinson, 485 U.S. 224, 231-32 (1988)). The final data 

from the NAPOLI-1 study was material because the execution of the 

SAP revealed results that Wang and the members of the biometrics 

team celebrated with champagne the day they analyzed the data to 

get the results. Moreover, these results had a positive impact on 

Merrimack stock. A representative from FINRA testified at trial 

that the day after the NAPOLI-1 study results were announced to 

the public, the stock price jumped up 59 percent and the volume of 

trading activity jumped 2,841 percent. Therefore, we (and the 

jury) can reasonably infer that knowledge of the good results from 

this study were important to investors' trading decisions and 

"significantly altered" the information available about Merrimack 

stock. Id. 
- 34 - 

We move on to Larrabee factors 2-5 and examine the 

defendants' relationship, the timing of their communication, and 

the timing and pattern of trading activities together. 240 F.3d 

at 21-22. Wang and Chan had a well-established relationship: The 

evidence clearly shows that they knew each other for years as 

friends and colleagues working in similar professional positions 

in the same industry. They communicated frequently, walking or 

eating together at lunch time. Chan frequently traded in Merrimack 

shares at a time Wang had valuable information about one of the 

clinical trials at the company, placing his largest order for 

shares (32,522 shares as opposed to the usual 2,000-10,000 shares) 

two days after Wang processed the data of the NAPOLI-1 study and 

got good results -- more than a week before those results went 

public. 

To be sure, the timeframe of all the defendants' relevant 

activities is indeed much wider than in Larrabee, where the 

defendant called his stockbroker one minute after receiving an 

email with MNPI. Id. at 20. But the timing of their communication 

and the timing and pattern of their stock trades are only three of 

the factors we consider. We move on to the sixth factor. 

Testimony from one of the FBI agents who initially 

interviewed Wang provides support for Wang's "attempts to conceal 

either the trades or the relationship between the tipper and the 

tippee." Id. at 22. In one of Wang's interviews with the FBI, he 
- 35 - 

was vague about whether he knew Chan worked at Akebia and he 

initially denied giving any loans to Chan before admitting he had 

loaned $10,000 to Chan for a real estate transaction in Texas. 

Wang also told the FBI Chan had paid him back in cash but Chan 

both told the FBI and testified at trial that he had paid Wang 

back with a check, and the check Chan gave Wang for $84K was 

admitted as an exhibit at trial. 

Moreover, a few months after Merrimack released the 

NAPOLI-1 study results to the public, Wang denied recognizing 

Chan's name on the list of Merrimack shareholders he was asked to 

review as part of the FINRA inquiry. Wang did not respond to the 

initial inquiry from Merrimack's general counsel until Merrimack's 

general counsel followed up with him a couple of weeks later. Chan 

appeared on the list as "Chan, Schultz." When a special agent 

from the FBI interviewed Wang in June 2016, Wang stated he did not 

know Chan's official first name. Chan's colleagues apparently 

knew him as Jason; the emails entered as exhibits at trial and the 

testimony from Chan's former colleagues indicate as much. But, 

the check Chan gave to Wang for $84K had "Schultz Chan" as the 

account holder, so it strains credulity (a reasonable jury could 

have found) to suggest Wang never knew Chan's official first name. 

To borrow an image we used in Larrabee, there are dozens 

of pieces to the puzzle of whether the evidence presented in this 

case will, "[w]hen assembled, . . . create a picture that supports 
- 36 - 

the inference" the defendants committed securities fraud. Id. at 

24. While we are missing a few pieces, such as the words on a 

screen or a transcript of a phone call where Wang told Chan to 

purchase shares in Merrimack, the evidence indicating Wang had 

MNPI about the NAPOLI-1 study from November 2013 through April 

2014 and Chan's frequent purchases of shares of Merrimack stock 

during this same time period, coupled with the evidence of bank 

activity -- the withdrawals and deposits and transfers -- fit 

neatly together, particularly when that puzzle is being assembled 

on a table with explicit instructions to construe the evidence in 

the light most favorable to the prosecution. As we have mentioned 

already, Chan placed his largest order of Merrimack shares two 

days after Wang received the final data for the NAPOLI-1 study for 

analysis. Even though the puzzle is missing a few pieces, the big 

picture allowed a reasonable jury to conclude each defendant was 

guilty beyond a reasonable doubt of securities fraud, as charged 

in Count Two. 

Wang's Akebia Trades Using MNPI from Chan 

We trudge ahead to the next count of conviction for 

securities fraud. Here's what we know from the evidence at trial 

about Chan's possession of MNPI related to the "11 study" and 

Wang's subsequent trades in shares of Akebia's stock: In Chan's 

first week in his new job at Akebia, there were a flurry of emails 

between Akebia's clinical research group members and a couple of 
- 37 - 

outside consultants because the final data from the "11 study" was 

ready for analysis and needed to be analyzed quickly so they could 

provide some preliminary or "top-line" results to Akebia's 

executives. On August 17, 2015, Chan's first day, his manager 

sent him information about the treatment tested in the "11 study" 

and the next day his manager started including him on the group 

emails discussing the final "11 study" data. 

On August 19, Chan told some co-workers he would be 

working on the data at home that evening because Akebia did not 

yet have the software he wanted for some of the statistical 

analysis and he could use his own computer to complete these 

calculations. That evening, Philippe Carriere, one of the members 

of the clinical research group, sent an email to the others with 

good news -- the data did not reveal a concerning number of adverse 

health events for patients, meaning unexpected negative side 

effects. On August 21 and August 24, the clinical research group 

exchanged additional emails and attachments with data analysis 

from the "11 study." 

The evidence at trial also showed Chan and Wang exchanged 

a series of text messages between August 24 and August 28 (content 

unknown) and Wang purchased shares in Akebia's stock sixteen times 

between August 28 and September 4. On September 8, Akebia issued 

a press release, announcing positive results from the "11 study."
- 38 - 

On November 6, 2015, Akebia's in-house attorneys asked 

Akebia's employees to examine a list of names sent by FINRA and to 

complete a form indicating if and how they knew any of the 

individuals on the list. Chan replied to the email with a 

completed form indicating he knew no one on the list. Wang's name 

was on the list, but as "Wang, Songjiang" instead of "Wang, Sam" 

which is how Chan knew him. Records of the defendants' text 

messages show an exchange of text messages that same day, in which 

Chan asked Wang whether he was working in his office that day.

Overall, there is sufficient evidence here too to paint 

a complete picture using each of the six Larrabee factors. While 

Chan denies he had MNPI before August 21, there is ample evidence 

he had access to MNPI about the "11 study" from the day he began 

his employment at Akebia when his new work team was in the throes 

of needing to turn around results from the study quickly. Chan 

and Wang's relationship and routine communications we've already 

canvassed above. In addition, the government presented evidence 

of frequent text messages in the days leading up to Wang's series 

of purchases of shares of Akebia stock. The trading activity began 

within 10 days of Chan's receipt of MNPI and ended before the 

results from the "11 study" were announced publicly on September 

8. The activities related to Wang's purchase of Akebia shares are 

much closer in time to one another than with the count related to 

the trading activity of Merrimack stock. Similar to Wang's denial 
- 39 - 

of recognition of Chan's names on the FINRA list Wang was asked to 

review in 2014, Chan denied recognizing Wang's name on the list 

FINRA sent to Akebia in November 2015. 

Viewing all the evidence in the light most favorable to 

the government, a reasonable jury could certainly conclude the 

defendants engaged in securities fraud when Wang bought the shares 

of Akebia stock in August and September 2015. We affirm the 

defendants' convictions in Count Three and move on to the last 

count of conviction. 

Chan's Own Akebia Trades 

We don't need to tell you much more about the evidence 

presented at trial to paint the picture of Chan's trading activity 

in shares of Akebia's stock. Most of the events described in the 

preceding section are relevant to this count, which was only 

charged against Chan. 

In addition to the events explained above, on August 19, 

2015, less than two hours after Carriere's email telling the 

clinical research group the "11 study" had not yielded any 

concerning patient safety results, Chan bought shares of Akebia 

stock. Chan also bought shares of Akebia stock on August 21. When 

Chan testified at trial, he denied having MNPI when he made the 

purchases of Akebia stock, claiming he first received MNPI on 

August 21, after placing the orders for shares of Akebia stock. 
- 40 - 

After reviewing the testimony and documents admitted at 

trial, there is more than enough evidence to allow a reasonable 

jury to conclude Chan traded in Akebia stock using MNPI to which 

he had access from the day he started working at Akebia.10 See 

McPhail, 831 F.3d at 10 n.4 (defining inside trading under the 

classical theory). We therefore affirm his conviction for 

securities fraud related to his own trading activity in Akebia 

stock. 

Now that we have affirmed the district court's denial of 

the defendants' motions for judgments of acquittal on each count 

of conviction, we turn to the remaining issues: The denial of 

their motion to compel a letter FINRA sent to the SEC, Chan's 

adjusted base offense level for sentencing, and an award of 

restitution given to Akebia. 

C. FINRA Referral Letter 

Long before the trial started, the defendants filed a 

motion to compel the government to turn over a referral letter 

FINRA sent to the SEC about purchases of Akebia stock before the 

10 The defendants also mention (Fed. R. Crim. P.) Rule 33 two 

times in their brief -- once in their statement of the issues and 

once when they provide the standard of review for Rule 33 motions 

for new trial. Their motion at the end of the trial indeed included 

a motion for new trial and the district court denied their motion. 

The defendants have not attempted to develop any argument specific 

to their denied motion for new trial, so, to the extent they were 

trying to challenge that denial, we deem the issue waived. See 

Valdés-Ayala, 900 F.3d at 33 n.14. 
- 41 - 

results of the "11 study" became public. The defendants asserted 

they were entitled to this letter pursuant to Federal Rule of 

Criminal Procedure 16 and Brady v. Maryland, 373 U.S. 83 (1963). 

The government opposed the motion, asserting the defendants were 

not entitled to the letter because the government had already 

provided them with all of the documents attached to the letter and 

the text of the letter itself did not provide any additional or 

exculpatory information but simply "summarized FINRA's findings 

and its suspicions concerning trading by the defendants and others 

-- or evidence concerning trading by other individuals FINRA 

investigated who were not targets of the government's 

investigation and have no connection to the charged conspiracy." 

At a hearing on the motion, the defendants explained their 

suspicion that the letter "drove the investigation in a direction 

that perhaps it shouldn't have, or it may have driven the 

prosecution itself based on what we believe is false information." 

The district court denied the motion, finding the 

government had provided the supporting documentation to the FINRA 

referral letter in question to the defendants already. The 

district court concluded the actual letter was both immaterial to 

the preparation of their defense and irrelevant because the SEC 

and U.S. Attorney's Office had independently investigated the 

concerns raised by FINRA. Moreover, the district court reasoned 

that even if the defendants were correct with their theory FINRA 
- 42 - 

passed incorrect information on to the SEC, the only relevant issue 

after the grand jury indicted the defendants was whether the 

government could prove the charges beyond a reasonable doubt. 

Before us, the defendants imply that the way in which 

the FBI conducted its investigation into the defendants' 

activities reveals the FBI relied on FINRA material withheld from 

the defendants but provided to the grand jury, so the FINRA 

document or documents constitute "Brady material" to which the 

defendants were entitled. The government, for its part, maintains 

its position that the defendants are not entitled to the FINRA 

letter because the government provided the defendants with all of 

the documentary attachments to the letter and the letter itself 

did not provide any additional or exculpatory information. 

We usually review the denial of a motion to compel 

discovery for abuse of discretion. United States v. Flete-Garcia, 

925 F.3d 17, 33 (1st Cir. 2019). But here the defendants have 

simply stated the issue along with some conjecture about what the 

FBI, the grand jury, and FINRA may have relied upon during their 

investigations. The defendants have not provided any argument 

about how the district court abused its discretion when it denied 

the defendants' pre-trial motion to compel. As we've stated 

already, we generally consider undeveloped arguments to be waived. 

Valdés-Ayala, 900 F.3d at 33 n.14; Rodríguez, 659 F.3d at 175. As 

a result, the defendants have not given us any reason to conclude 
- 43 - 

the district court abused its discretion when it denied their 

motion to compel. 

We move on to Chan's claim of error related to his 

sentence. 

D. Sentencing 

Adjusted Base Offense Level 

The district court calculated a guidelines sentencing 

range (GSR) of 63-78 months' incarceration but sentenced Chan to 

a below-guidelines term of 36 months' imprisonment.11 Chan did not 

object to the base offense level of 8 the district court assigned 

but did challenge the way in which the district court calculated 

his gain from the offenses. On appeal, Chan renews his objection 

to the district court's adjustment of his base offense level on 

the basis that it used the wrong method to calculate his financial 

gain from his trades in Akebia and Merrimack stock.12 We review 

11 During Chan's sentencing hearing, the district court 

commented the GSR had been largely driven by the loss calculation, 

which, as will be soon described, is actually a calculation of the 

financial gain to the defendant. See U.S.S.G. § 2B1.4(b). The 

district court briefly discussed its belief that Chan had not 

committed his crimes out of antisocial or greedy actions but had 

tried to help friends and family, without the actual gain to 

himself that the final calculation implied. The court concluded 

that, in this case, the dollar sum calculated was, in its totality, 

a "poor measure." 

12 To construe this issue on appeal as a challenge to the 

district court's calculation is generous considering Chan's 

"argument" on this issue in his brief is simply a whole cloth cutand-paste from the sentencing memorandum he filed in the district 

court prior to sentencing.
- 44 - 

preserved challenges to the loss calculation during the sentencing 

phase de novo. United States v. Mayendía-Blanco, 905 F.3d 26, 34 

(1st Cir. 2018). 

U.S.S.G. § 2B1.4 applies to insider trading offenses. 

Paragraph (a) prescribes a base offense level of 8. Paragraph (b) 

identifies the "[s]pecific [o]ffense [c]haracteristics" used to 

potentially adjust the base offense level floor: 

(1) If the gain resulting from the offense 

exceeded $6,500, increase by the number of 

levels from the table in § 2B1.1 . . . 

corresponding to that amount. 

(2) If the offense involved an organized 

scheme to engage in insider trading and the 

offense level determined above is less than 

level 14, increase to level 14. 

Section 2B1.4(b). As the background to the statutory section 

explains, the "gain, i.e., the total increase in value realized 

through trading in securities by the defendant and persons acting 

in concert with the defendant or to whom the defendant provided 

inside information, is employed instead of the victims' losses." 

Section 2B1.4(b) cmt. background. The table in § 2B1.1(b)(1) 

instructs the district court to increase the offense by 14 if the 

loss is more than $550,000 and by 16 if the loss is more than 

$1,500,000. 

Chan urged the district court to calculate the gain to 

him from trading in Akebia's and Merrimack's shares either at the 

point in time he sold them or the shares' values at the time of 
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the sentencing hearing. Instead, the district court determined 

"the gain [to Chan] resulting from the offense" by using the value 

of the stocks the day after the results from the clinical studies 

became public, in part because this calculation would reflect the 

loss to the stakeholders from the sale of their shares to the 

defendants.13 In this way, the district court tried to capture the 

value of the MNPI to which the defendants had the advantage of 

knowing and using; that is, the change in the value of the stock 

between the date of the defendants' purchases of shares and the 

date when everyone had the same information about the clinical 

studies' results. The district court did not include the value of 

shares purchased before the evidence at trial clearly showed the 

defendants had possession of MNPI.14 The district court's final 

gain calculation was $1,542,051.79. Even though this dollar figure 

meant the district court should have added 16 to the offense level 

pursuant to § 2B1.1(b)(1), it chose to add 14. 

13 During the sentencing hearing, the district court also 

found paragraph (b)(2) in the specific offense characteristics of 

§ 2B1.4 applied to Chan, instructing an automatic increase "to 

level 14" "[i]f the offense involved an organized scheme to engage 

in insider trading and the offense level determined above is less 

than level 14." Chan would not concede this paragraph applied and 

the district court calculated the loss, or in this case, the gain 

to Chan resulting from his offense. 

14 The district court also excluded Wang's own purchases of 

Merrimack stock, which was neither a point of focus during the 

trial or included as one of the charges. 
- 46 - 

While our circuit has not yet examined the proper method 

of calculating the gain to determine the value realized by the 

inside trader, three of our sister circuits have weighed in. The 

Second Circuit said the gain is "reasonably determined by reference 

to the market price once the inside information has been revealed, 

not the profit (or loss) realized by the tippee, whose hold 

decisions may be informed by various factors." United States v. 

Riley, 638 F. App'x 56, 65 (2d Cir. 2016). And in United States 

v. Nacchio, the Tenth Circuit took a deep dive into considering 

how the loss calculation for an insider trading conviction should 

be determined.15 573 F.3d 1062 (10th Cir. 2009). The court agreed 

with that defendant's proposed approach to adopt, in part, the 

method courts employ in determining damages and disgorgement in 

civil insider trading enforcement cases. Id. at 1078. As the 

Tenth Circuit quoted, "[i]n [a civil] insider trading case, the 

proper amount of disgorgement is generally the difference between 

the value of the shares when the insider sold them while in 

possession of the material, nonpublic information, and their 

market value 'a reasonable time after public dissemination of the 

15 The Tenth Circuit used the 2000 version of the Guidelines 

but noted §§ 2F1.1 and 2F1.2 had been consolidated with §§ 2B1.1 

and 2B1.4, and § 2B1.4 "contain[ed] the same language as former 

§ 2F1.2 regarding gain . . . relevant to [its] analysis." Nacchio, 

573 F.3d at 1066 n.5; see also United States v. Burdi, 414 F.3d 

216, 218 n.2 (1st Cir. 2005) (acknowledging § 2F1.1's deletion and 

consolidation with § 2B1.1). 
- 47 - 

inside information.'" Id. at 1078 (second alteration in original) 

(quoting S.E.C. v. Happ, 392 F.3d 12, 31 (1st Cir. 2004)). This 

is precisely the approach used by the district court in this case. 

Chan argues that we should instead adopt the Eighth 

Circuit's approach, which understands gains to be "the total profit 

actually made from a defendant's illegal securities transactions." 

United States v. Mooney, 425 F.3d 1093, 1100 (8th Cir. 2005) (en 

banc). The Second Circuit rejected this very approach in Nacchio, 

573 F.3d at 1072, and we do the same today. While Chan argues 

that the district court's approach fails to distinguish between 

"bargain seekers" like himself and "profit seekers" and results in 

sentencing based on an "arbitrary value determined by the 

sentencing court," Chan's proposed approach and that of the Eighth 

Circuit would mean that sentences would reflect market 

fluctuations unrelated to the offense of insider trading, such 

that co-conspirators could receive differing sentences even when 

they committed the same crime. See id. at 1086 (finding that it 

"contravenes important objectives of federal sentencing" to allow 

the extent of punishment to be imposed "on the throw of the dice 

-- the ups and downs of the stock market" (quoting Mooney, 425 

F.3d at 1108 n.12 (Bright, J., dissenting))). 

Nor does the text of the official commentary to U.S.S.G. 

§ 2B1.4 convince us that the district court's approach was wrong. 

The Eighth Circuit relied on the plain meaning of that text in 
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endorsing a gains calculation based on the profit received through 

sale, explaining that "realized," both in common parlance and in 

the tax context, see Cottage Savings Ass'n v. Comm'r, 499 U.S. 

554, 559 (1991) (holding that "to realize a gain or loss in the 

value of property, the taxpayer must engage in a 'sale or other 

disposition of [the] property,'" (alteration in original) (quoting 

Treas. Reg. § 1001(a))), refers to conversion into actual money. 

Id. at 1100. But, we find the relevant provision of the tax code, 

which states that "[t]he amount realized from the sale or other 

disposition of property shall be the sum of any money received" 

Treas. Reg. § 1001(a), to be distinguishable from the "total 

increase in value realized through trading in securities," 

U.S.S.G. § 2B1.4, cmt. background. The tax code explicitly 

calculates "amount realized" from the sale, whereas there is no 

reference to stock sales in the Guidelines -- "trading in 

securities" refers only to the offense itself. Moreover, we find 

"value realized" to be distinguishable from "amount realized." 

Compare Amount Realized, Black's Law Dictionary (11th ed. 2019) 

("The amount received by a taxpayer for the sale or exchange of an 

asset . . . ."), with Value, Black's Law Dictionary (11th ed. 2019) 

("1. The significance, desirability, or utility of something 

. . . . 2. The monetary worth or price of something . . . ." 

(emphasis added)). 
- 49 - 

Because we do not read the Guidelines commentary to 

preclude the district court's approach and we agree that "the civil 

disgorgement remedy provides an appropriate guidepost for 

sentencing in insider trading cases," Nacchio, 573 F.3d at 1086, 

we find no error in the district court's approach. Therefore, we 

affirm Chan's sentence. 

Restitution 

During the sentencing phase of this case, the government 

asked the district court to order $312,899.22 in restitution to 

Akebia pursuant to the Mandatory Victims Restitution Act (MVRA), 

18 U.S.C. § 3663A.16 The request was primarily to reimburse the 

expenses Akebia incurred throughout the government's investigation 

and prosecution of the defendants for representation by the law 

firm Ropes & Gray LLP, but also included fees from a couple of 

contract attorney firms. The district court ultimately ordered 

the defendants to pay $170,476.36 in restitution to Akebia, with 

Wang on the hook for 10% of the award, or $17,047.64, and Chan 

responsible for 90%, or $153,428.72. 

According to the defendants, this amount is excessive 

because, as we understand their argument, Akebia has included 

16 This was in fact a revised request after the district court 

concluded the details of Akebia's first request for restitution 

improperly included some categories of expenses and asked the 

government to resubmit the request for restitution on Akebia's 

behalf. 
- 50 - 

categories of tasks and expenses that should have been deemed 

outside the permissible scope of the MVRA.17 The government 

responds that the restitution order was neither excessive nor 

unreasonable because the district court reviewed each item of 

Akebia's request before determining Akebia was entitled to 

approximately half of the total amount requested.

We examine restitution orders for abuse of discretion, 

reviewing the relevant factual findings for clear error. United 

States v. Naphaeng, 906 F.3d 173, 179 (1st Cir. 2018) (citing 

United States v. Chiaradio, 684 F.3d 265, 283 (1st Cir. 2012)). 

The MVRA provides victims of crimes with reimbursement 

for various types of losses and expenses. Relevant to the 

defendants' convictions, this statute says the district court must 

award restitution to a victim of an offense against property, 

including offenses committed by fraud, § 3663A(c)(1)(A)(ii), for 

"necessary child care, transportation, and other expenses incurred 

17 The defendants invite us to review each item in Akebia's 

request for restitution but we decline to do so given our 

deferential standard of review. We also note that, similar to the 

section of the defendants' brief challenging the district court's 

calculation for determining the appropriate adjustment to the base 

offense level in the preceding section of this opinion, the 

defendants have simply pasted paragraphs cut from their objections 

and responses to the restitution requests filed with the district 

court and used this material as their appellate argument. As a 

result, it is difficult to determine precisely how, in the 

defendants' minds, the district court erred with the determination 

of the award because their prose is written in response to the 

government and Akebia's submissions to the district court during 

the restitution proceedings. 
- 51 - 

during participation in the investigation or prosecution of the 

offense or attendance at proceedings related to the offense," 

§ 3663A(b)(4). 

Our court has said that "expenses qualifying for 

restitution are not unlimited, . . . [but] will pass muster if 

they would not have been incurred in the absence of the offense, 

were not too attenuated in fact or time from the crime, . . . and 

were reasonably foreseeable." United States v. Janosko, 642 F.3d 

40, 42 (1st Cir. 2011) (internal quotation marks and citations 

omitted). The Supreme Court's recent decision in Lagos v. United 

States, though addressing the context of a victim undertaking its 

own private investigation and so not directly relevant here, also 

sharpened the focus on the word "necessary" in § 3663A(b)(4). 138 

S. Ct. 1684, 1687-88, 1690 (2018); see also In re Akebia 

Therapeutics, Inc., No. 19-1929, ___ F.3d ___ (our opinion, also 

issued today, with a deeper examination of Janosko and Lagos, 

denying Akebia's challenge to the restitution order). 

The district court understood the defendants' objection 

to Akebia's request for restitution to be centered on their 

assertion that the expenses Akebia claimed for reimbursement were 

neither necessary nor reasonable. The district court concluded 

that its evaluation of the expenses submitted for reimbursement 

needed to focus on whether the expenses were necessary as well as 
- 52 - 

foreseeable. It concluded attorney's fees would be awarded only 

when they were necessary expenses. 

Ultimately, our task is to consider "whether the 

district court has made 'a reasonable determination of appropriate 

restitution by resolving uncertainties with a view towards 

achieving fairness to the victim,'" including "whether the 

restitution award has 'a rational basis in the record.'" United 

States v. González-Calderón, 920 F.3d 83, 85 (1st Cir. 2019) (first 

quoting United States v. Alphas, 785 F.3d 775, 787 (1st Cir. 2015), 

then quoting United States v. Salas-Fernández, 620 F.3d 45, 48 

(1st Cir. 2010)). The defendants have not given us any reason to 

conclude the district court erred in any respect with its 

restitution order.18 After reviewing the district court's 

reasoning, we conclude there was no abuse of its broad discretion 

to determine which expenses in this case claimed were necessary, 

foreseeable, and just. 

18 Akebia has also challenged the restitution order through a 

petition for writ of mandamus filed with this court, asking us to 

vacate the order and reconsider some of the categories of expenses 

the district court disallowed. See In re Akebia Therapeutics, 

Inc., No. 19-1929, ___ F.3d ___. Akebia's challenge to the 

restitution order is much more thorough and we address those 

arguments in a separate opinion, issued today, affirming the order. 
- 53 - 

CONCLUSION 

To wrap this all up, we affirm Chan's and Wang's 

convictions, Chan's term of incarceration, and the order of 

restitution awarding Akebia $170,476.36.