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US prosecutors have charged a former Pfizer employee, a Massachusetts police chief, a former pharmaceutical executive and investors in a Donald Trump media venture in separate insider trading cases, as part of a wide-ranging sweep targeting alleged corruption in public markets.
The US attorney’s office in Manhattan indicted 10 defendants with securities fraud and other related charges, for stealing a combined total of $30mn by allegedly trading on privileged information. Nine of the individuals were also sued in related cases brought by the Securities and Exchange Commission on Thursday.
Prosecutors alleged that a former Pfizer staff member who was privy to positive data from the clinical trials of the Paxlovid antiviral Covid-19 treatment had bought call options in the company’s stock before the results were made public in November 2021, and passed on the tip to a friend, who also traded on the information.
The next day, Pfizer’s shares rose by more than 10 per cent on the news, in the largest single-day price move for the stock in more than a decade.
Amit Dagar, a senior statistical programming lead at Pfizer, and his friend Atul Bhiwapurkar were arrested on Thursday morning. They made almost $350,000 on the trades, prosecutors alleged.
Patrick Smith, a lawyer for Dagar, said his client denied the charges. “Nobody at Pfizer ever told Mr Dagar, who was on the ‘blinded’ side, the results of the Paxlovid trial,” he added. “Blinded” refers to the arm of a clinical trial in which participants are kept in the dark about whether they are being given a placebo.
A lawyer for Bhiwapurkar did not reply to requests for comment. In a statement, Pfizer said the alleged conduct was a “violation of the company’s policies” and that it was “co-operating with the government’s investigation”.
Separately, US agencies charged Jordan Meadow, a New York broker, for leveraging inside information from an unidentified large investment bank in the city “to make millions of dollars in illegal profits trading stock on behalf of himself and his clients”.
Meadow gifted high-value items including a Rolex watch to a friend, Steven Teixeira, in exchange for information about planned corporate acquisitions scraped from the laptop of Teixeira’s girlfriend, then an executive assistant at the investment bank, prosecutors alleged.
In 2021, Teixeira purchased call options after learning that gaming company Penn National was going to acquire publicly listed Canadian digital media business Score, for approximately $2.2bn, prosecutors alleged. A year later he learned that cloud computing company VMware was the target of an acquisition.
Teixeira traded on the information and has pleaded guilty and agreed to co-operate with prosecutors. He allegedly shared the knowledge with Meadow, who in turn shared it with his associates, prosecutors said. The group made a combined profit exceeding $5mn once Penn National’s deal was announced in 2021, and $100,000 on VMware trades. A lawyer for Meadow did not immediately respond to a request for comment.
In a separate action on Thursday, four men were arrested for engaging in an $2.2mn insider trading scheme over a merger of two pharmaceutical companies in 2020. Joseph Dupont, then a vice-president at Alexion Pharmaceuticals, now owned by AstraZeneca, shared knowledge of an upcoming acquisition of Portola Pharmaceuticals with Shawn Cronin, a childhood friend and a sergeant in the police department of Dighton, Massachusetts, prosecutors alleged.
A lawyer for Dupont declined to comment, while a lawyer for Cronin did not immediately respond to a request for comment.
Cronin shared the information with a friend, who in turn shared it with another friend, according to prosecutors.
Regulators also charged three investors involved in a blank-cheque company that planned to take Trump’s media business public with insider trading, alleging they made more than $22mn by illicitly buying up its shares after finding out about the transaction.
“Insider trading is not a quick buck,” US attorney Damian Williams said in a statement. “It’s not easy money. It’s not a sure thing. It’s cheating. It’s a bad bet. It’s a ticket to prison. Because my office, the Southern District of New York, is watching.”