New York: Amit Dagar, a 44-year-old Indian American who worked as a data analyst for Pfizer Inc., was found guilty of insider trading and conspiracy on Thursday, following a two-week trial in a federal court in New York. Dagar used confidential information about the results of clinical trials of Paxlovid, a drug developed by Pfizer to treat COVID-19, to make illegal profits from trading Pfizer call options in November 2021.
According to the indictment, Dagar was involved in managing the data analysis of Pfizer’s clinical drug trials, which gave him access to sensitive and non-public information about the company’s products. On November 4, 2021, he learned that a trial of Paxlovid, a medicine designed to treat mild to severe COVID-19 infection, had produced positive results, showing that the drug reduced hospitalizations and deaths by 89% compared to a placebo.
The results were confidential and meant to remain so until Pfizer announced them to the public on November 5. However, Dagar violated his duty of trust and loyalty to Pfizer by purchasing short-dated, out-of-the-money Pfizer call options that expired days and weeks later, betting that the stock price would rise. He also tipped a close friend, who also bought similar call options.
The next day, Pfizer publicly released the results of its Paxlovid study before the market opened, causing a surge in its stock price. The stock opened and closed more than 10% higher than the previous day’s closing price, reflecting the high demand and potential of the drug. Dagar and his friend took advantage of the price increase and sold their call options for profits of more than $270,000 and $30,000, respectively.
The US Attorney’s Office, Southern District of New York, charged Dagar with one count of securities fraud and one count of conspiracy to commit securities fraud, alleging that he abused his position at Pfizer and exploited the confidential information for his benefit. The jury agreed and delivered a swift verdict, finding him guilty on both counts.
“As the jury’s swift verdict shows, the proof at trial was overwhelming that Amit Dagar stole information about Paxlovid from his employer, Pfizer, and used that illegal edge to profit in the stock market,” US Attorney Damian Williams said in a statement. “Combatting the corruption of our financial markets continues to be a top priority of this Office. Would-be insider traders tempted by the prospect of easy money should know that the Southern District of New York is watching, we’ll catch you, and we’ll make sure you pay the price for violating the law,” he added.
Dagar, who hails from Hillsborough, New Jersey, faces a maximum sentence of 20 years in prison for securities fraud and a maximum sentence of five years in prison for conspiracy to commit securities fraud. The maximum potential sentences are prescribed by US Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. Dagar is scheduled to be sentenced on May 25, 2024.