July 20, 2023

SEC settles insider trading charges with former Merck employee

On July 17, 2023, the US Securities and Exchange Commission issued a cease and desist order against Nirdosh Jagota, former vice president of global regulatory affairs at Merck & Co., Inc.  The order resulted from an investigation by the SEC of insider trading in the securities of Pandion Therapeutics, Inc. prior to the public announcement of that company’s acquisition by Merck.

In January 2021, Merck, a New Jersey corporation, instructed Jagota and the Chemistry, Manufacturing and Controls regulatory group that he headed, to undertake due diligence relating to the acquisition of Pandion, a clinical-stage biopharmaceutical company headquartered in Watertown, Massachusetts.  During the due diligence process, Jagota learned material non-public information about the prospective transaction, and on two occasions in February 2021 – the 9th and the 17th —  Jagota purchased 500 Pandion shares.  On the dates of these share purchases, Jagota was aware that Merck had taken steps to submit a tender offer for Pandion; Jagota had even approved a slide deck summarizing Merck’s due diligence findings.  Hence, according to the cease and desist order, Jagota based his purchases on the material non-public information he had acquired during the course of his employment, in violation of the duty of trust and confidence he owed to Merck.  On February 25, 2021, the acquisition of Pandion was announced to the public, and the value of Pandion’s shares increased by 133%, netting Jagota nearly $40,000 in profits.

The SEC found that Jagota’s conduct had violated Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3(a) thereunder.  Jagota was ordered to cease and desist from future violations, and is barred from acting as an officer or director of covered issuers for a period of three years.  In addition, Jagota was ordered to pay disgorgement of $39,660, prejudgment interest of $3,605, and a civil money penalty in the amount of $39,660.

Cease and desist order