Insider Stock Trading
March 31, 2011 by staff
Insider Stock Trading, The Securities and Exchange Commission today accused a U.S. Food and Drug Administration (FDA) chemist insider trading on confidential information about upcoming announcements of decisions of the FDA drug approval, and generating more than 3, million in illicit profits and losses avoided.
The SEC alleges that Cheng Yi Liang illegally traded ahead of at least public announcements on the decisions of the FDA drug approval with 19 listed companies. Some ads relevant FDA approval of new drugs, while others concerned negative FDA decisions. In each case, he traded in the same direction as the announcement. Liang did everything to hide his insider trading. He traded in seven brokerage accounts, none of which were in his name. One belonged to her mother 84-year-old who lives in China.
In a parallel action, criminal charges filed by the Department of Justice against Liang were unsealed today.
“Liang victims both investors who have been disadvantaged by its flight information in and U.S. citizens he has violated the trust placed personal gain above the public good,” said Robert Khuzami, Director Division of the SEC enforcement.
Daniel M. Hawke, head of unit of the SEC, Market Abuse, added: “insider trading laws apply to federal employees as they do on Wall Street traders, leaders of company executives or hedge funds. Many government agencies like the FDA and have regularly generated confidential information about the mobile market. Federal employees who divert such information to take risks insider trading potential exposure to civil and criminal violations of federal securities laws. ”
According to the SEC complaint filed in U.S. Court for the District of Maryland (Greenbelt Division), Liang worked at the FDA Center for Drug Evaluation and Research. Beginning in July 2006 by Liang bought shares for a profit before positive announcements concerning the decisions of the FDA, stock short to profit before six negative ads, and sold to avoid losses for two negative ads.
For example, the SEC alleges that Liang negotiated in advance of an announcement by the FDA to approve the application of clinical data for drug Viibryd. Liang accessed a database containing confidential FDA documents and critical information on the FDA review of the application of clinical data, and then used that information to buy more than ,000 shares of Clinical Data at a cost of over $, 000. After the close of trading Friday, January 2011, the FDA issued a press release approving Viibryd. Share price clinical data has increased by more than 67 percent the following Monday and Liang has sold its entire position of clinical data in less than 15 minutes to a profit of about $ 380,000.
The SEC alleges that Liang has used business profits for personal gain. And checks totaling at least 1.2 million were written from the accounts he used for trading on a bank account in his name to him or his wife directly, or credit card companies to pay account balances in his or his wife’s name. Nearly 65,000 dollars and checks were written from brokerage accounts to auto dealers to buy vehicles later recorded by Liang and his wife.
The SEC complaint alleges that Liang has violated Article 17 (a) of the Securities Act of 1933 and section 10 (b) of the Securities Exchange Act of 1934 and Rule b-5 thereunder, and seeks a permanent injunction against future violations, the return of operating profits and losses avoided illegal in most pre-judgment interest and a penalty. Complaint names the SEC Zhuge Liang Yi woman and account holders for the seven trading accounts he used – Hui Juan Chen Liang mother, her son Andrew Liang Shuhua Zhu, Zhongshan Chen and Toda Honami – as defendants Relief for the recovery of patients acquired funds for which they have no legitimate claim. Criminal charges by the Department of Justice against Andrew Liang were unsealed today in the District of Maryland.
Deborah Tarasevich, Carolyn Welshhans Owen Granke, and Ricky Sachar conducted the SEC investigation – unit members of the SEC, Market Abuse, Washington, DC SEC litigation effort will be led by Matthew Martens and David Williams. The grace of the SEC the Department of Justice Section Criminal Fraud, Federal Bureau of Investigation, the Department of Health and Human Services Office of Inspector General and the Office of the United States Attorney for District of Maryland for their ongoing assistance in this matter. The SEC investigation is continuing.
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