Ex-Pfizer Employee Charged With Insider Trading Over Covid Pill
NEW YORK, NY (IANS) – A former Pfizer statistician and his accomplice, both hailing from India, has been charged with insider trading by the US financial regulator Securities and Exchange Commission (SEC).
The SEC’s complaint, filed in a district court in New York, charged Amit Dagar and Atul Bhiwapurkar with violating the anti-fraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5.
Dagar and his close friend and business partner, Bhiwapurkar, participated in an insider trading scheme in November 2021 to reap illicit profits from options trading based on inside information about the results of clinical trials of Paxlovid, a medicine used to treat Covid-19.
Dagar, 44, of Hillsborough in New Jersey was a senior statistical program lead for the Paxlovid drug trial, which began in July 2021 as part of the company’s efforts to address the global health pandemic.
On or about November 4, 2021, he learned that a Pfizer trial of the drug Paxlovid — a medicine designed to treat mild to severe Covid infection — had produced positive results, the Southern District of New York Attorney’s Office announced.
The results were confidential and meant to remain so until Pfizer publicized them on or about November 5, 2021.
Later that same day, and while those results remained confidential, Dagar purchased short-dated, out-of-the-money call options in Pfizer stock. He also tipped his close friend, Bhiwapurkar about the coming drug results and the latter also purchased short-dated, out-of-the-money Pfizer call options that expired approximately two weeks later.
Bhiwapurka also tipped another friend who similarly purchased short-dated, out-of-the-money Pfizer call options that expired approximately three weeks later.
On November 5, 2021, and before the market opened, Pfizer publicly released the results of its Paxlovid study. That same day, following the publication of the positive results, Pfizer’s stock price increased substantially, opening — and eventually closing — more than 10 per cent higher than the prior day’s closing price.
According to SEC, Dagar’s and Bhiwapurkar’s trading generated approximately $214,395 and $60,300, respectively, in illicit profits, which amounted to one-day investment returns of 2,458 per cent and 791 per cent.
“As alleged in our complaint, Amit Dagar misused his access to confidential clinical trial results to enrich himself and his friend, Atul Bhiwapurkar,” said Joseph Sansone, Chief of SEC’s Market Abuse Unit.
“Dagar and Bhiwapurkar allegedly leveraged this information by trading out-of-the-money call options to generate massive one-day returns,” Sansone added.
Dagar who was arrested on June 29, has been charged with four counts of securities fraud, each of which carries a maximum sentence of 20 years in prison, and one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison.
Bhiwapurkar of Milpitas in California, who was arrested the same day, has been charged with two counts of securities fraud, each of which carries a maximum sentence of 20 years in prison, and one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison.
The case originated from the SEC’s Market Abuse Unit’s Analysis and Detection Center, which uses data analysis tools to detect suspicious trading patterns.