The Department of Justice has accused a former Pfizer employee and his friend and business partner in participating in an insider-trading scheme based on confidential information about the results of clinical trials of a medicine used to treat COVID-19.
Prosecutors in New York have accused 44-year-old Amit Dagar, of Hillsborough, New Jersey, of buying call options in Pfizer stock after learning that the COVID-19 drug Paxlovid performed favorably a day before the drug trial results were made public.
Dagar, a former senior statistical program lead for the Paxlovid drug trial, also allegedly tipped off a friend, Atul Bhiwapurkar, who also purchased short-dated Pfizer stock options, all before the trial results were announced.
Prosecutors said that the day after the pair bought the securities, Pfizer announced the results of the study, sending its stock soaring. The trades made the two accused individuals a total of $350,000 in illicit profits, prosecutors said.
Both have been arrested, with Dagar facing four counts of securities fraud and Bhiwapurkar charged with two counts of securities fraud. Both of them have also been charged with conspiracy, with the fraud charges carrying a maximum sentence of 20 years behind bars.
“Insider trading is not a quick buck,” U.S. attorney Damian Williams said in a statement. “It’s cheating. It’s a bad bet. It’s a ticket to prison.”
The trades amounted to one-day investment returns of 2,458 percent for Dagar and 791 percent for Bhiwapurkar, according to the Securities and Exchange Commission (SEC), which has separately charged the pair with violations of the Securities Exchange Act.
“As alleged in our complaint, Amit Dagar misused his access to confidential clinical trial results to enrich himself and his friend, Atul Bhiwapurkar,” Joseph Sansone, chief of the market abuse unit at the SEC, in a statement.
“Dagar and Bhiwapurkar allegedly leveraged this information by trading out-of-the-money call options to generate massive one-day returns. Thanks to our surveillance, the defendants must now face the consequences of their greed,” Sansone added.
Pfizer did not immediately respond to a request for comment from The Epoch Times, but a spokesperson for the company told Reuters that the charges “relate to the personal conduct of a former Pfizer employee in violation of the company’s policies.” The Pfizer spokesperson also told the outlet that the company is cooperating with the investigation.
Patrick Smith, an attorney who represents Dagar, told Reuters that his client denies the allegations.
The charges against Dagar and Bhiwapurkar are part of four separate insider-trading cases brought forward by the DOJ against 10 defendants who collectively stand accused of generating over $30 million from illegal securities trading based on confidential information.
Three Charged in Relation to Trump Media SPAC Deal
The DOJ has accused three Florida men of insider trading in Digital World Acquisition Corp. (DWAC) based on confidential information obtained before the special purpose acquisition company (SPAC) publicly announced plans to merge with former president Donald Trump’s social media company.
Michael Shvartsman, his brother Gerald Shvartsman, and Bruce Garelick made over $22 million in illegal profits in late 2021 based on their access to confidential information about DWAC’s planned merger with Trump Media & Technology Group (Trump Media), prosecutors alleged on June 29.
Neither Trump nor his company, which operates the Truth Social app, face any charges in relation to the allegations against the trio.
Trump, who is the Republican frontrunner in the 2024 presidential race, faces a number of civil and criminal investigations, which he has denounced as a plot meant to thwart his White House run.
The planned merger between DWAC, a SPAC, and Trump Media has not been finalized.
Each of the three defendants in the DWAC-related insider-trading case faces five to seven conspiracy and fraud charges that could result in decades behind bars.
‘Exploited Confidential Information’
Prosecutors said Thursday that the three accused “sophisticated investors” had been invited to invest in DWAC, and after signing non-disclosure agreements (NDA), they were provided with confidential information that one of the acquisition targets was Trump Media.
Among the terms of the NDA was that they couldn’t use any so-called material, non-public information (MNPI) to buy or sell securities on the open market, per the Justice Department.
After the three individuals made initial investments in DWAC through its initial public-offering process, Garelick was given a seat on the board of directors of DWAC, which provided him with access to “valuable” information about the planned merger with Trump’s social media company.
“After learning MNPI [material non-public information] through his role on DWAC’s board, [Garelick] provided updates to his alleged co-conspirators—which he called “intelligence”—about the status of the merger negotiations and the timing of a public merger announcement,” prosecutors alleged.
Based on this confidential information, the three defendants then allegedly bought millions of dollars of DWAC securities on the open market before news of the planned merger with Trump Media became public.
After the merger was announced publicly, the defendants’ stock and warrant holdings in DWAC rose in value substantially, at which point they sold them for “significant profit,” prosecutors said.
All three were arrested in Florida last week.
Reuters contributed to this report.
