On Thursday morning, a former Pfizer employee and his close friend were arrested on charges of using insider information to profit from Pfizer’s stock.
The charges allege they illegally leveraged confidential details about breakthrough results from the trial of Pfizer’s anti-COVID medication, Paxlovid.
Amit Dagar, who was involved in the Paxlovid trial, is accused of purchasing stock options that bet on Pfizer’s stock rising shortly after being informed by his supervisor in November 2021 that the company was about to announce the drug as a “game changer” for the pandemic.
According to the allegations, Dagar also tipped off Atul Bhiwapurkar, a friend and business partner, who then made similar investments.
The two men reportedly gained over $350,000 from their trades, as stated by the U.S. Attorney for the Southern District of New York, who is handling the case.
U.S. Attorney Damian Williams condemned insider trading in a statement, saying, “Insider trading is not a quick buck. It’s not easy money. It’s not a sure thing. It’s cheating. It’s a bad bet. It’s a ticket to prison.”
This case is part of a broader investigation that includes three other unrelated insider trading cases.
Attorneys for Dagar and Bhiwapurkar have denied the allegations. Patrick Smith, Dagar’s lawyer, stated via email that “Nobody at Pfizer ever told Mr. Dagar, who was on the ‘blinded’ side, the results of the Paxlovid trial.”
Smith added that Dagar is “looking forward to defending himself in court.”
Michael Bachner, representing Bhiwapurkar, claimed his client’s investments were based on “publicly available information released by Pfizer two days before the announcement, in which they touted the likelihood of a successful test and the efficacy of Paxlovid.”
Bachner affirmed that they “intend to vigorously defend this case against the charges.”
Pfizer spokesperson Pamela Eisele confirmed the company’s cooperation with the investigation, noting, “The charges in this case relate to the personal conduct of a former Pfizer employee in violation of the company’s policies.”
Federal prosecutors allege that Dagar, who was involved in data analysis for the Paxlovid trial but was supposed to be unaware of the results, learned about the trial’s “extraordinarily positive” outcomes when his manager inadvertently revealed the success.
On November 4, 2021, the manager informed Dagar that the trial “got the outcome” and that a press release would follow. Dagar’s response, “oh really” and “kind of exciting,” was noted by prosecutors.
Dagar is said to have made his trades later that afternoon, and Bhiwapurkar made his investments two hours afterward. Pfizer announced the trial results the next morning, causing the company’s stock to rise more than 10 percent that day.
Dagar, 44, faces four counts of securities fraud, each carrying a maximum sentence of 20 years in prison, and one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years.
Bhiwapurkar, 45, faces two counts of securities fraud and one count of conspiracy to commit securities fraud.
In addition, both men are facing civil securities fraud charges from the Securities and Exchange Commission, which aims to recover their profits with interest and impose fines.
