A former FDA chemist pleaded guilty to charges that he tapped a confidential database to glean inside information that led to nearly $3.8 million in illicit stock trades.
Cheng Yi Liang admitted to using the database of new drug applications to suss out drugs that were about to be approved. Liang would then buy shares in the company that makes the drug, selling his stake after share prices jumped on news of FDA approval.
Liang, 57, pleaded guilty to one count of insider trading, which carries maximum penalties of 20 years in prison and a $5 million fine, and to a second count of making a false statement with a maximum 1-year prison sentence and more fines. He also agreed to forfeit his illegal gains from the stock trades (PDF).
Liang’s son Andrew Liang was also charged in the scheme, but the insider trading charges were dropped after the younger Liang pleaded guilty to child pornography charges, according to The Associated Press.
In one trade cited by prosecutors, Liang bought up 46,875 shares of
Clinical Data Inc. stock, selling the shares after the FDA announced approval of the antidepressant drug Viibryd Jan. 21. Liang pulled down $384,300 when he sold his stake Jan. 24, according to court documents.