SEC Charges Former Pfizer Statistician with Insider Trading Ahead of COVID-19 Announcement

The Securities and Exchange Commission (SEC) has made an announcement regarding insider trading charges against Amit Dagar, a former employee of Pfizer Inc., and his close friend and business partner, Atul Bhiwapurkar. The charges are related to their trading activities prior to Pfizer’s announcement on November 5, 2021, regarding the successful results of a randomized, double-blind study for its COVID-19 antiviral treatment, Paxlovid. Following the announcement, which was described by Pfizer’s CEO as a “game-changer” in the global fight against the pandemic, the company’s stock price experienced the largest single-day price increase since 2009, rising by almost 11 percent.

According to the SEC’s complaint, Dagar held a senior position as a statistical program lead for the Paxlovid drug trial, which was part of Pfizer’s efforts to combat the global health crisis. The complaint alleges that on the day preceding the Paxlovid announcement, Dagar obtained material nonpublic information about the trial’s success. Specifically, it is claimed that Dagar’s supervisor informed him through a chat conversation that “we got the outcome,” there was significant upcoming work, and a press release would be issued the following day. In response, Dagar expressed excitement. Shortly after this exchange, Dagar allegedly purchased short-term, out-of-the-money call options for Pfizer, some of which expired the next day. Dagar then shared this information with Bhiwapurkar, who also purchased similar call options for Pfizer. The complaint states that Dagar and Bhiwapurkar generated illicit profits of approximately $214,395 and $60,300, respectively, resulting in one-day investment returns of 2,458 percent and 791 percent.

The SEC’s Market Abuse Unit’s Analysis and Detection Center played a crucial role in detecting the suspicious trading patterns that led to this case. The unit utilizes data analysis tools to identify such activities.

Joseph Sansone, Chief of the Market Abuse Unit, stated, “Amit Dagar misused his access to confidential clinical trial results to enrich himself and his friend, Atul Bhiwapurkar. Dagar and Bhiwapurkar allegedly leveraged this information by trading out-of-the-money call options to generate massive one-day returns. Thanks to our surveillance, the defendants must now face the consequences of their greed.”

The SEC’s complaint, filed in the U.S. District Court for the Southern District of New York, charges Dagar and Bhiwapurkar with violating antifraud provisions under Section 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5. The SEC seeks injunctive relief, disgorgement with prejudgment interest, and civil penalties.

In parallel with the SEC’s action, the U.S. Attorney’s Office for the Southern District of New York has also announced criminal charges against Dagar and Bhiwapurkar.

The SEC’s investigation, which is ongoing, involves the efforts of Colby Steele, a staff member of the Market Abuse Unit, with assistance from Patrick McCluskey of the Market Abuse Unit’s Analysis and Detection Center. The investigation is supervised by Paul Kim and Mr. Sansone. The SEC’s litigation will be led by Charlie Divine and Mr. Steele, under the supervision of James Connor. The SEC acknowledges the support and assistance of the U.S. Attorney’s Office for the Southern District of New York and the FBI.