- Former Pfizer employee Amit Dagar, along with his friend Atul Bhiwapurkar, face charges of securities fraud and conspiracy to commit securities fraud for alleged insider trading related to Pfizer’s COVID-19 drug, Paxlovid.
- The duo are accused of using non-public information about positive Paxlovid trials to purchase short-dated, out-of-the-money call options in Pfizer stock, making over $350,000 when the successful trial data was released, leading to a 10% increase in Pfizer’s stock value.
- If convicted, Dagar and Bhiwapurkar could face up to 20 years in prison for each of the security fraud counts; they also face a parallel action by the Securities and Exchange Commission.
In a shocking turn of events, a former employee of pharmaceutical giant Pfizer has been charged with insider trading related to the company’s COVID-19 drug, Paxlovid.
The U.S. Department of Justice announced the charges against Amit Dagar, 44, on Thursday, accusing him of leveraging his inside knowledge of Paxlovid trials to buy Pfizer stock ahead of the release of positive trial results.
According to the Southern District of New York’s Department of Justice’s office, Dagar was not the only one involved in the illicit scheme.
His close friend, Atul Bhiwapurkar, was also tipped off about the upcoming drug results. Bhiwapurkar, in turn, shared this information with another friend, known as ‘Individual-1’ in the case.
All three made substantial purchases of short-dated, out-of-the-money call options in Pfizer stock, expecting the company’s shares to rise significantly.
The charges against Dagar include four counts of securities fraud and one count of conspiracy to commit securities fraud.
Bhiwapurkar also faces serious legal troubles, having been charged with two counts of security fraud and one count of conspiracy to commit security fraud.
Both are alleged to have purchased Pfizer’s stocks in November 2021, ahead of the public release of Paxlovid’s positive trial results.
U.S. Attorney Damian Williams warned that insider trading was not a path to quick money, stating, “It’s cheating. It’s a bad bet. It’s a ticket to prison.”
The duo allegedly made over $350,000 on their Pfizer stocks after the company released its trial data, causing a roughly 10% increase in the share price.
If convicted, both Dagar and Bhiwapurkar face up to 20 years in prison for each of the security fraud counts.
FBI official Michael Driscoll underscored that insider trading not only brought ill-gotten gains for those involved but also damaged the public’s faith in the financial markets.
Dagar, through his lawyer Patrick Smith, has denied any wrongdoing and expressed readiness to defend himself in court.
The Securities and Exchange Commission has also launched a parallel action against Dagar and Bhiwapurkar.
“The defendants must now face the consequences of their greed,” said Joseph Sansone, chief of the SEC’s Market Abuse Unit.