June 15, 2016

The SEC charged hedge fund manager Sanjay Valvani with reaping unlawful profits of nearly $32 million for hedge funds he managed by investing in health care securities based on inside information he received from consultant Gordon Johnston.  Johnston, who worked at the FDA for a dozen years, remained in close contact with former friends and colleagues while working for a trade association representing generic drug manufacturers and distributors.  Johnston concealed his separate role as a hedge fund consultant and obtained confidential information about anticipated FDA approvals for companies to produce enoxaparin, a generic drug that helps prevent the formation of blood clots.  The SEC alleges Johnston funneled the details of his conversations with FDA personnel to Valvani who then traded in advance of public announcements concerning FDA approvals for such companies as Momenta Pharmaceuticals, Watson Pharmaceuticals, and Amphastar Pharmaceuticals.  The SEC further alleges that Valvani in turn tipped fellow hedge fund manager Christopher Plaford.  SEC

Tagged in: Insider Trading, Securities Fraud,