Former Pfizer Employee Charged With Insider Trading

Washington [US]: Financial regulator in the US announced it charged insider trading against Amit Dagar, a former Pfizer Inc. employee, and his close friend and business partner, Atul Bhiwapurkar, for trading in advance in November 2021 based on inside information that the study of its Covid-19 antiviral treatment, Paxlovid, was successful.

Following that announcement in which Pfizer’s CEO referred to the news as a “game-changer” in the global efforts to “halt the devastation” of the pandemic, the company’s stock price increased by nearly 11 per cent, the largest single-day price move in the stock since 2009. Insider trading generally refers to buying or selling a stock or any financial assets on the basis of material, non-public information about them.

According to the regulator Securities and Exchange Commission’s complaint, Dagar 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 the day before the Paxlovid announcement, the complaint alleges, Dagar learned about the material, nonpublic information about the success of the trial. Specifically, the SEC alleged that Dagar’s supervisor informed him via chat that “we got the outcome,” there was a “lot of work lined up,” and that there would be a “press release tomorrow,” to which Dagar responded with “oh really” and “kind of exciting”, SEC said today in a statement.
The complaint alleged that Dagar’s and Bhiwapurkar’s trading generated approximately USD 214,395 and USD 60,300 respectively in illicit profits, which amounted to one-day investment returns of whopping 2,458 percent and 791 per cent.

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.

“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 the Market Abuse Unit.

“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,” he added.

The SEC’s complaint, filed in US District Court for the Southern District of New York, charges Dagar and Bhiwapurkar with violating the antifraud provisions of “Section 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5 thereunder and seeks injunctive relief, disgorgement with prejudgment interest, and civil penalties”.

Parallely, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against Dagar and Bhiwapurkar, SEC said in the statement.