A former employee for Pfizer was charged by federal investigators on Thursday after being accused of insider trading related to non-public results related to COVID drug Paxlovid.
Amit Dagar, 44, was charged with four counts of securities fraud and one count of conspiracy to commit securities fraud after federal investigators said that he used his knowledge of Paxlovid trials to purchase stock in Pfizer ahead of the release of positive test results.
Dagar “purchased short-dated, out-of-the-money call options in Pfizer stock. DAGAR also tipped his close friend, ATUL BHIWAPURKAR, about the coming drug results and BHIWAPURKAR also purchased short-dated, out-of-the-money Pfizer call options that expired approximately two weeks later. BHIWAPURKAR also tipped another friend (‘Individual-1’), who similarly purchased short-dated, out-of-the-money Pfizer call options that expired approximately three weeks later,” the Southern District of New York’s Department of Justice’s office said.
Bhiwapurkar, from California, was also charged with two counts of security fraud and one count of conspiracy to commit security fraud. The two are accused of purchasing the stocks in November 2021 after Dagar saw positive results from the company’s testing of Paxlovid ahead of their public release.
“Insider trading is not a quick buck. 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,” said U.S. Attorney Damian Williams. “And we’re working quickly to investigate and prosecute anyone who corrupts our financial markets. And we’ll keep at it as long as it takes. You can bet on that.”
According to the DOJ, the two made over $350,000 on the stocks after Pfizer released the testing data, leading the pharmaceutical giant’s stock to increase by about 10%. Both Dagar and Bhiwapurkar could face 20 years in prison for each of the security fraud counts if convicted.
“The charges announced today center on the defendants’ alleged participation in illegal securities trading based on material, non-public information. Insider trading schemes not only yield ill-gotten gains for those directly involved but also damage the public’s faith in the fairness of our financial markets,” said FBI official Michael Driscoll.
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Dagar “looks forward to defending himself in court,” according to lawyer Patrick Smith, who said the former Pfizer employee denied any wrongdoing.
A parallel action was unveiled against the pair by the Securities and Exchange Commission.
“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,” said Joseph Sansone, the chief of the SEC’s Market Abuse Unit.