The U.S. Attorney's Office, Southern District of New York has announced charges in four separate insider trading cases — two of which involve pharma companies.
One of the cases alleges that former Pfizer employee Amit Dagar engaged in insider trading, using confidential information about Paxlovid's clinical trials to illegally profit from options trading in November 2021. Dagar, an employee involved in managing trial data, learned on November 4 that the trials yielded positive results. Despite the confidentiality until November 5, Dagar bought short-dated call options in Pfizer stock and tipped off his friend, Atul Bhiwapurkar, who purchased similar options expiring in about two weeks. Bhiwapurkar then informed another person, who also acquired similar options expiring in approximately three weeks.
On November 5, 2021, Pfizer publicly announced the Paxlovid study results causing its stock price to drastically increase. Subsequently, Dagar, Bhiwapurkar, and Individual-1 sold their call options, resulting in substantial profits totaling around $350,000. Dagar was arrested and charged with four counts of securities fraud and one count of conspiracy to commit securities fraud. Bhiwapurkar was also arrested and charged with two counts of securities fraud and one count of conspiracy to commit securities fraud.
In another case, Joseph M. Dupont, a senior employee at Alexion, is alleged to have breached his duty of trust and confidence to Alexion by sharing confidential information about Alexion’s upcoming acquisition of Portola Pharmaceuticals with a friend. That friend then acted on the information by trading Portola securities and also unlawfully shared the insider information with additional friends and family.
Collectively, the defendants reaped financial profits exceeding $2.3 million from their insider trading activities, which involved trading stocks and call options. To address these violations, the SEC is seeking several legal remedies including obtaining permanent injunctions against the defendants, which would prohibit them from further violating securities laws. The SEC also aims to recover the defendants gains through disgorgement and the payment of prejudgment interest on those gains and a permanent ban on the defendants serving as officers or directors of registered companies, as they are deemed unfit for positions involving fiduciary responsibilities due to their involvement in illegal insider trading.
