Chemist charged with $3.6m insider trading
Thursday 31 March 2011
A chemist working at the US Food and Drug Administration (FDA) has been charged with insider trading, after amassing what the authorities said was $3.6m (£2.2m) in profit from illegally trading on his advance knowledge of the regulator's product approval decisions.
Drug company shares can surge or plunge depending on the outcome of the FDA's deliberations, and Cheng Yi Liang, 57, was accused by the Securities and Exchange Commission (SEC) of trading ahead of at least 27 announcements about drugs from 19 separate US companies.
Mr Liang was also charged with criminal conspiracy, wire fraud and securities fraud, along with his 25-year-old son Andrew, for insider trading in five companies since 2007.
Last night, the men were free on bail at their home in Maryland, following their arrest and a court appearance on Tuesday. The Justice department said its investigation of the case was continuing.
Investigators installed secret tracking software on Mr Liang's FDA computer which, in January, caught him reviewing internal documents that recommended the approval of an anti-depressant, Viibryd, and then immediately buying shares in the drug's manufacturer, Clinical Data Inc.
Mr Liang and his son funded their trading with a second mortgage on their home, and used proceeds to fund cars, holidays and a second property, according to the authorities' legal filings.
Mr Liang has worked at the FDA since 1996 in the Office of New Drug Quality Assessment. He and his son used several brokerage accounts to execute trades, prosecutors said. One account was in the name of Mr Liang's 84-year-old mother, who lived in China, according to the SEC.
"Liang's conduct was calculated, repeated and egregious," the SEC lawsuit says. "Liang was a serial insider trader who violated the public's trust for his own profit on numerous occasions."
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