A former employee of Pfizer, Amit Dagar, and his his friend, Atul Bhiwapurkar were arrested on Thursday in connection with an insider trading incident.
Dagar, who had access to confidential information regarding clinical trials of the COVID-19 treatment Paxlovid, allegedly exploited this privileged knowledge to engage in illicit options trading for personal gains. Dagar, based in Hillsborough, New Jersey, had been involved in data analysis for various clinical drug trials at Pfizer.
Around November 4, 2021, Dagar learned that Pfizer’s trial of Paxlovid had yielded positive results, but the outcome was intended to be disclosed to the public on November 5, 2021. On the same day, Dagar purchased short-dated, out-of-the-money call options in Pfizer stock. He shared this information with Bhiwapurkar, who subsequently acquired call options expiring two weeks later. Bhiwapurkar then informed an unnamed acquaintance, who purchased call options expiring three weeks after the initial purchase.
When Pfizer announced the results of the Paxlovid study the next day, their stock price surged, opening and closing more than 10% higher than the previous day’s closing price. Following the publication, Dagar, Bhiwapurkar, and the unnamed individual sold their Pfizer call options, collectively making over $350,000.
Both Dagar and Bhiwapurkar were arrested on Thursday morning. Dagar faces four counts of securities fraud, each carrying a maximum prison sentence of 20 years, and one count of conspiracy to commit securities fraud, which carries a maximum prison sentence of five years. Bhiwapurkar, who resides in Milpitas, California, has been charged with two counts of securities fraud and one count of conspiracy to commit securities fraud, with the same potential maximum prison sentences.
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