A former FDA chemist who faces 20 years in prison after pleading guilty to using a confidential agency database to time stock market trades agreed to pay back the $3.8 million he made with the illicit trades.
Cheng Yi Liang admitted last month to using a database of new pharmaceutical applications to suss out drugs that were about to be approved. He would then buy shares in the company that makes the drug just ahead of the approval announcement and sell his stake after share prices jumped on the news.
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.
The Securities & Exchange Commission filed a parallel civil lawsuit against Liang the U.S. District Court for Maryland. Now he’s agreed to pay back the $3.8 million, without admitting any guilt in the civil SEC action, according to court documents.
The SEC case against Liang has been dismissed without prejudice, according to the documents, meaning further legal action is possible if other chicanery in the case comes to light.
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 unrelated child pornography charges.
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.