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Getting the Inside Dope on FDA Decisions

Posted in FDA, Fraud and Abuse, Life Sciences, Pharmaceuticals, White Collar

Day Pitney’s July 2016 White Collar Roundup included the following item:

Getting the Inside Dope on FDA Decisions

The U.S. Attorney’s Office for the Southern District of New York announced charges against several individuals allegedly involved in a scheme to profit by trading ahead of approvals by the Food and Drug Administration (FDA). The government claims Sanjay Valvani, a portfolio manager, and Stefan Lumiere, a former portfolio manager, both at a healthcare-focused hedge fund in New York, agreed with Gordon Johnston, a former senior FDA official, “to unlawfully obtain highly confidential and material nonpublic information from the FDA about the agency’s approval of pending generic drug applications.” Valvani, Lumiere and others are alleged to have used that information to make profitable securities trades.

U.S. Attorney Preet Bharara said the defendants “conspired to extract highly confidential and tightly guarded information about pending applications for generic drug approvals from the FDA, and traded on such information, reaping millions of dollars in illegal profits.” He claimed they also “conspired to mismark securities held by their fund, lying to their investors and unjustly enriching themselves in the process.” According to the government, Johnston and another alleged coconspirator, Christopher Plaford, had already pleaded guilty to participation in the scheme. Counsel for Valvani and Lumiere each denied the allegations.

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