On September 17, 2021, the US Securities and Exchange Commission announced that Dayakar Mallu, a former information technology executive, had been charged with insider trading in connection with trading in Mylan NV securities in advance of public announcements about the company’s financials, an impending acquisition, and two drug application approvals.
According to the complaint, between 2017 and 2019, a friend of Mallu’s who served as senior manager at Mylan shared material non-public information with Mallu on four separate occasions in exchange for a portion of Mallu’s trading profits. Mallu, who allegedly gained more than $8 million from the unlawful trades and avoided losses in excess of $700,000, paid his friend personally in Indian rupees in India to avoid detection.
Mallu was charged by the SEC with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; he consented to the entry of a judgment permanently enjoining him from committing further securities violations, and prohibiting him from acting as an officer or director of any company that issues certain securities. As part of the SEC settlement, Mallu also agreed to pay a civil penalty that will be determined by the court at a later date. The settlement is subject to approval by the court.
In a parallel criminal case, Mallu pleaded guilty to conspiracy to commit securities fraud, and aiding in the preparation of a false tax return. Mallu is scheduled to be sentenced in the US District Court for the Western District of Pennsylvania on January 24, 2022.