SEC Charges Two Indian Americans With Insider Trading Ahead of COVID-19 Outbreak Announcement
- In a parallel action, the U.S. Attorney's Office for the Southern District of New York also announced criminal charges against Amit Dagar, a statistician at Pfizer, and his close friend and business partner Atul Bhiwapurkar.
The Securities and Exchange Commission has charged two Indian Americans with insider trading ahead of the COVID-19 announcement. Amit Dagar, a former Pfizer Inc. employee, and his close friend and business partner, Atul Bhiwapurkar, participated in an insider trading scheme 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.
According to the SEC’s complaint, Dagar, 44, of Hillsborough, 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 the day before the Paxlovid announcement, the complaint alleges, Dagar, a statistician with the company, learned material, and nonpublic information about the success of the trial. Several hours after that exchange, “Dagar allegedly purchased short-term, out-of-the-money Pfizer call options, including options that expired the very next day, and then tipped Bhiwapurkar, 45, of Milpitas, California, who also purchased similar call options in Pfizer,” the SEC says. The complaint alleges that 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 percent and 791 percent.”
The SEC’s complaint, filed in the U.S. 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.
In a parallel action, the U.S. Attorney’s Office for the Southern District of New York also announced criminal charges against Dagar and Bhiwapurkar. Dagar 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, the Department f Justice says. Charges include “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.”