A former Pfizer employee and his business associate are being charged with insider trading after allegedly gaining significant profits from trading on game-changing non-public drug trial results for a COVID-19 treatment, according to the Securities and Exchange Commission (SEC).
In November 2021, Amit Dagar, a former Pfizer Inc. employee, and his close friend and business partner, Atul Bhiwapurkar, participated in options trading based on information that a double-blind study for Pfizer's COVID-19 antiviral treatment, Paxlovid, was successful ahead of the public announcement, according to the U.S. Attorney's Office of the Southern District of New York and the SEC.
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After Pfizer CEO Albert Bourla referred to the results as a "game-changer" in the global efforts to end the pandemic, the company's stock rose by nearly 11%. That marked the largest single-day price move in Pfizer's stock since 2009, according to the SEC.
"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," U.S. Attorney Damian Williams said in a statement Thursday. "We’re working quickly to investigate and prosecute anyone who corrupts our financial markets."
Pfizer told FOX Business that the company is cooperating with the government's investigation into the matter.
"The charges in this case relate to the personal conduct of a former Pfizer employee in violation of the company’s policies," a Pfizer spokesperson told FOX Business.
At the time of the trade, Dagar was a senior statistical program lead for the Paxlovid drug trial, which began in July 2021, according to the SEC complaint.
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The day before the company's announcement on Nov. 5, Dagar allegedly learned the non-public information via chat with his supervisor, according to the SEC. Several hours after talking with his supervisor, Dagar allegedly "purchased short term, out-of-the-money Pfizer call options, including options that expired the very next day."
The SEC also alleged that Dagar tipped off Bhiwapurkar, who proceeded to purchase similar call options in Pfizer as well. The duo, and an individual whom Bhiwapurkar allegedly tipped off later, sold their Pfizer call options at significant profits, totaling more than $350,000.
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Dagar was charged with four counts of securities fraud, and Bhiwapurkar faces two counts of securities fraud. The two were also charged with conspiracy to commit securities fraud.
The fraud charges each carry a maximum sentence of 20 years in prison, and the conspiracy charge carries a maximum sentence of five years in prison.
