July 7, 2023

Two friends charged with insider trading in connection with clinical trials for antiviral COVID-19 treatment

On June 29, 2023, the US Securities and Exchange Commission filed insider trading charges in the US District Court for the Southern District of New York against former Pfizer employee Amit Dagar and his friend Atul Bhiwapurkar.  The charges were related to unlawful trades placed before Pfizer announced the success of its randomized, double-blind study for Paxlovid, an antiviral treatment for COVID-19, in November of 2021.

According to the SEC’s complaint, Dagar worked for Pfizer on a team that compiled and organized data during Pfizer’s Paxlovid clinical trials.  On the day before the public announcement, Dagar learned of the successful clinical trial and, in breach of his fiduciary duty to Pfizer, purchased Pfizer call options.  He also allegedly shared the material nonpublic information (“MNPI”) with his friend Bhiwapurkar, who also allegedly purchased Pfizer securities based on the tip.  Following the announcement, Pfizer’s stock increased 11 percent from its previous close – the largest single-day stock price move since 2009.  According to the SEC, Dagar generated a one-day profit of approximately $214,000 (a 2,458 percent return on his investment), and Bhiwapurkar realized approximately $60,000 (a 791 percent return on his investment).

The SEC charged Dagar and Bhiwapurkar with violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.  The SEC is seeking injunctive relief, the disgorgement of all ill-gotten gains with prejudgment interest and civil monetary penalties.

On June 29, 2023, the US Attorney’s Office for the Southern District of New York filed parallel criminal charges against Dagar and Biwapurkar, which include securities fraud and conspiracy.

SEC Press Release | SEC Complaint | USAO Press Release | USAO Indictment