FDA Chemist Charged With Trading On Confidential Information Related To Drug Approvals

more+
less-

The Securities and Exchange Commission (“SEC”) and the Department of Justice (“DOJ”) announced on March 29, 2011, that civil and criminal proceedings are being brought against Cheng Yi Liang, a chemist employed by the Food and Drug Administration (“FDA”), for alleged insider trading. The complaints allege that Liang acquired confidential information about upcoming FDA drug approvals through his employment with the FDA, and that he traded on that information prior to public announcements concerning the status of drug reviews. According to the SEC, Liang traded on material nonpublic information related to 27 different FDA drug reviews, earning over $3.6 million in illicit profits. The SEC complaint asserts liability under SEC Rule 10b-5, promulgated pursuant to Section 10(b) of the Exchange Act, and Section 17(a) of the Securities Act. Criminal complaints filed against both Liang and his son, Andrew Liang, allege that the two conspired to commit securities fraud and wire fraud, and committed securities fraud and wire fraud. All of the complaints were filed in the U.S. District Court for the District of Maryland.

Liang was employed by the FDA’s Center for Drug Evaluation and Research (“CDER”), which is responsible for reviewing applications for new drugs and either approving the drug or identifying problems in the application. CDER’s review of drug applications is nonpublic. The FDA only discloses information related to the review of a drug when the drug is approved. According to the SEC’s complaint, Liang had access to a computer database detailing the review process for each drug. He routinely accessed that database to obtain material nonpublic information immediately prior to trading in companies with applications pending. Liang purchased shares in those companies shortly before positive announcements, and shorted or sold shares before negative announcements.

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ropes & Gray LLP | Attorney Advertising

Written by:

more+
less-

Ropes & Gray LLP on:

JD Supra Readers' Choice 2016 Awards
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
×
Loading...
×
×