January 24, 2024

Jury convicts former pharma employee of insider trading

On January 18, 2024, a jury in the United States District Court for the Southern District of New York rendered a verdict of guilty against Amit Dagar, formerly a senior statistical programming lead at a US-based pharmaceutical company.

Dagar was indicted in June 2023, and a superseding two-count indictment was filed on December 13, 2023, charging Dagar with securities fraud and conspiracy to commit securities fraud in violation of 15 USC §§ 78j(b) and 78ff, and 240 CFR rule 10b-5.  According to the indictment, in the fall of 2021, Dagar worked on a clinical trial of an anti-viral medication designed to treat COVID-19.  As stated in the indictment, “During the course of his employment, however, Dagar learned information about the relevant study and its results before the public.  For example, on or about November 4, 2021, Dagar learned that [the company] was stopping the relevant study because the results were positive, and that a press release would be issued the next day about the results.”  This information was followed by an email from another employee suggesting that the clinical trial was ending and that results must be prepared for submission to the regulatory authorities.

As detailed in the indictment, Dagar interpreted these communications as an indication that the clinical trial had been successful, and that the company would immediately request approval by the Federal Drug Administration.  On the same day, Dagar purchased three sets of call options allowing him to purchase up to 66,500 shares of company stock.  Dagar also tipped a friend and business partner, Atul Bhiwapurkar, who purchased 200 call options based on the material non-public information.  By the following day, November 5, 2021, the value of the company’s stock had risen more than 10 percent, and continued to rise significantly during the following weeks.  Together, Dagar and Bhiwapurkar, his co-conspirator, profited by more than $349,000 when they sold their shares.  The indictment charges that “Dagar used material non-public information obtained from [the company] to execute, and cause and assist another to execute, the purchase of …call option contracts,” operating “as a fraud and deceit on a person, to wit, in knowing violation of duties owed by Dagar to [the company].”

A jury found Dagar guilty after a one-day trial.  Sentencing is scheduled for May 2024.  Atul Bhiwapurkar, indicted together with Dagar, pleaded guilty on October 19, 2023 to one count of the six-count indictment.  He is scheduled to be sentenced in February 2024.

Superseding indictment | Verdict