SEC Enforcement Action against Former Spero Executives: Individual Liability for Misleading FDA-Related Disclosures

On January 16, 2026, the Securities and Exchange Commission (SEC) instituted settled cease‑and‑desist proceedings against Ankit Mahadevia and Satyavrat Shukla, the former CEO and CFO of biopharmaceutical company Spero Therapeutics Inc. (Spero), for misleading statements and omissions regarding feedback received from the U.S. Food and Drug Administration (FDA) on Spero’s lead drug candidate, tebipenem. Notably, Spero itself was not charged, consistent with a growing emphasis on individual — rather than corporate — liability in SEC enforcement actions.

The Facts

Tebipenem, a potential oral alternative to intravenous drugs treating complicated urinary tract infections, was Spero’s lead drug under development. In October 2021, Spero publicly reported that (1) its Phase 3 trial met its primary efficacy endpoint demonstrating it was not inferior to its intravenous counterparts, and (2) it had submitted a new drug application (NDA) to the FDA.

At a mid‑cycle meeting on February 8, 2022, the FDA review team told Spero that its trial had improperly included certain patients, that the FDA’s own analysis excluding those patients suggested the required, non‑inferiority margin as it related to the intravenous drugs was not met, and that this raised “serious concerns” about efficacy. After Spero unsuccessfully attempted to persuade the FDA that its concerns were ill-founded, the FDA restated its concerns during a March call and subsequently canceled an advisory committee meeting and labeling discussion in late March, citing “deficiencies” in the NDA based upon its concerns.

Notwithstanding the FDA’s issues, Spero’s March 31, 2022, Form 10‑K — which both Mahadevia and Shukla certified — stated that the Phase 3 trial “achieved its primary objective as specified in the protocol,” while describing the FDA’s issues only as unspecified “deficiencies.” Additionally, the Form 10‑K framed as hypothetical the risks that the FDA might disagree with trial design or that results might not meet the required level of statistical significance, without disclosing that the FDA had already raised those exact concerns. During the same day’s earnings call, CEO Mahadevia repeated the trial’s success “as specified in the protocol” and Spero’s continued belief in the strength of tepibenem. Mahadevia refused, however, to answer analyst questions regarding the FDA’s feedback. And while he highlighted precommercial launch preparations, he did not disclose the company’s simultaneous planning for a possible rejection.

In early May 2022, the FDA advised that a second successful Phase 3 trial would be required. In response, Spero disclosed the FDA’s concerns and announced that it would halt tebipenem commercialization and cut approximately 75% of its workforce. Spero’s stock price dropped 64% that day, with analysts calling the news “shocking” and “particularly unexpected.”

The SEC concluded that these omissions and characterizations created a misleading impression that the FDA’s concerns did not undermine the core efficacy results previously disclosed to investors. The SEC charged Mahadevia and Shukla with violating Section 17(a)(2) of the Securities Act of 1933. Without admitting or denying the charges, the respondents consented to: (1) a cease‑and‑desist order against future violations, and (2) a civil penalty of $112,500 (Mahadevia) and $75,000 (Shukla).

Takeaways

This settled enforcement case is notable for multiple reasons. First, it reflects the current SEC’s continued commitment to material misrepresentation and omission cases involving public issuers. Although we have not seen many of these cases in recent months, and this case presumably predated Paul Atkin’s assumption of the Chairman role, it shows that the SEC Enforcement Division is continuing to bring cases in this space. Second, and perhaps more noteworthy, the case is significant for the absence of any charges against Spero, reflecting the current Commission’s tendency to seek individual accountability, rather than liability against the company that ultimately impacts already-harmed investors. Third, this case shows the current SEC’s seemingly “light” touch with respect to charges and sanctions. The SEC charged Mahadevia and Shukla with only non-scienter fraud violations, notwithstanding the seemingly damning allegations. Moreover, the monetary penalties are relatively modest, given the market impact of the misleading disclosures. Finally, and consistent with current SEC practices, this settled administrative proceeding was released on the SEC’s website with little fanfare, including no press release. The above suggests that, while SEC Enforcement will still pursue materially misleading public disclosures, it will be less severe in its approach.