"Obama Administration" Charges FDA Chemist With Insider Trading Ahead of Drug Approval Announcements

[SidDithers]

http://blogs.forbes.com/timothyspangler/2011/04/01/sec-charges-fda-chemist-with-insider-trading-ahead-of-drug-approval-announcements/

SEC Charges FDA Chemist With Insider Trading Ahead of Drug Approval Announcements

The Securities and Exchange Commission this week charged a U.S. Food and Drug Administration (FDA) chemist with insider trading on confidential information about upcoming announcements of FDA drug approval decisions, generating more than $3.6 million in illicit profits and avoided losses.

The SEC alleges that Cheng Yi Liang illegally traded in advance of at least 27 public announcements about FDA drug approval decisions involving 19 publicly traded companies. Some announcements concerned the FDA’s approval of new drugs while others concerned negative FDA decisions. In each instance, he traded in the same direction as the announcement.

According to the SEC’s complaint filed in the U.S. District Court for the District of Maryland, Liang works in the FDA’s Center for Drug Evaluation and Research. Beginning as early as July 2006, Liang purchased shares for a profit before 19 positive announcements regarding FDA decisions, shorted stock for a profit before six negative announcements, and sold shares to avoid losses before two negative announcements.

The SEC alleges that Liang used the trading profits for his own personal benefit. Checks totaling at least $1.2 million were written from the accounts he used for trading to a bank account in his name, to him or his wife directly, or to credit card companies to pay off balances in accounts in his or his wife’s name. Nearly $65,000 worth of checks were written from the brokerage accounts to car dealerships to purchase vehicles later registered to Liang and his wife.

Sid

[Angry Dragon]

1. But congress is not subject to insider trading laws........