Day Pitney's July 2016 White Collar Roundup included the following item:
The U.S. Attorney's Office for the Southern District of New
York announced charges against several individuals
allegedly involved in a scheme to profit by trading ahead of
approvals by the Food and Drug Administration (FDA). The government
claims Sanjay Valvani, a portfolio manager, and Stefan Lumiere, a
former portfolio manager, both at a healthcare-focused hedge fund
in New York, agreed with Gordon Johnston, a former senior FDA
official, "to unlawfully obtain highly confidential and
material nonpublic information from the FDA about the agency's
approval of pending generic drug applications." Valvani,
Lumiere and others are alleged to have used that information to
make profitable securities trades.
U.S. Attorney Preet Bharara said the defendants "conspired to
extract highly confidential and tightly guarded information about
pending applications for generic drug approvals from the FDA, and
traded on such information, reaping millions of dollars in illegal
profits." He claimed they also "conspired to mismark
securities held by their fund, lying to their investors and
unjustly enriching themselves in the process." According to
the government, Johnston and another alleged coconspirator,
Christopher Plaford, had already pleaded guilty to participation in
the scheme. Counsel for Valvani and Lumiere each denied the
allegations.
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