The U.S. Securities and Exchange Commission charged Amit Dagar, a former Pfizer employee, and his friend Atul Bhiwapurkar for trading on insider information. The illegal trades were based on inside knowledge of Pfzier’s successful trial for Paxlovid, the antiviral drug that is used to treat Covid-19.
The two also were hit with charges from the U.S. Attorney’s Office for the Southern District of New York.
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As explained in a press release from the Southern District office, on November 4, 2021, Dagar learned that Paxlovid, a drug to treat Covid‑19 infections, had successful trial results. Those results were to remain confidential until the next day, so Dagar purchased short-dated, out-of-the-money call options in Pfizer stock and tipped off his friend Bhiwapurkar as well. Bhiwapurkar also tipped off a friend, referred to as “Individual-1” in the charges.
When the market opened the next day, Pfizer publicly released the Paxlovid results, and Pfizer’s stock price jumped more than 10%. Dagar, Bhiwapukar and Individual-1 later sold their Pfizer call options, making a total of $350,000 in profits.
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Dagar was arrested at his home in Hillsborough, New Jersey and 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.
Bhiwapukar, who lives in Milpitas, California, has been charged with two counts of securities fraud and one count of conspiracy to commit securities fraud.
The lesson here kids? Just say no to drug insider trading.
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