A former Pfizer Inc. employee was charged with using inside information about the company’s Covid-19 treatment Paxlovid to make illegal options trades.
Amit Dagar, 44, was charged in a federal indictment unsealed Thursday with conspiracy and four counts of securities fraud for allegedly trading on confidential news of positive clinic trial results for the drug and for passing the tip to a close friend. The friend, Atul Bhiwapurkar, 45, was charged in the same indictment.
In a parallel, civil case, the US Securities and Exchange Commission said that Dagar, who had served as a senior statistician for the Paxlovid trial in 2021, made $214,395 by buying Pfizer stock options a day before the trial’s results were announced. The friend, Bhiwapurkar, 45, passed the tip on to another friend, who isn’t identified or charged, according to the government.
Together the three made more than $350,000 illegally trading in short-dated, out-of-the-money call options, according to the government.
Dagar, of Hillsborough, New Jersey, and Bhiwapurkar, of Milpitas, California, are each charged with conspiracy and securities fraud. If found guilty, they face as many as 20 years in prison for securities fraud and up to five years for conspiracy, although they would likely receive much less time under federal sentencing guidelines.
In its lawsuit, the SEC said Bhiwapurkar made $60,300 in illicit profits trading on the information. Dagar and Bhiwapurkar denied the SEC’s allegations through lawyers.
“Nobody at Pfizer ever told Mr. Dagar, who was on the ‘blinded’ side, the results of the Paxlovid trial,” Dagar’s lawyer, Patrick Smith, said in a statement. “As the indictment indicates, the government’s theory is based upon an aggressive and incorrect interpretation of a single text message that itself did not state any results.”
Michael Bachner, a lawyer for Bhiwapurkar, said his client’s decision to purchase Pfizer stock was based on public information.
The criminal case is US v. Dagar, 23-cr-319; the civil case is Securities and Exchange Commission v. Dagar, 23-cv-5564; US District Court, Southern District of New York (Manhattan).
