Visium's Valvani charged with insider trading on FDA leaks
By Jonathan Stempel
NEW YORK (Reuters) - A Manhattan hedge fund manager was charged on Wednesday with trading on confidential tips about drug approvals, in one of the biggest insider trading cases since a 2014 court ruling made it harder for U.S. prosecutors to pursue them.
U.S. Attorney Preet Bharara in Manhattan accused Sanjay Valvani of Visium Asset Management LP of fraudulently making $25 million by gaining advance word about U.S. Food and Drug Administration approvals of generic drug applications.
Prosecutors said the inside information was provided by Gordon Johnston, a consultant who got tips from a friend and former FDA colleague still working at the agency.
Valvani passed some of these tips to Christopher Plaford, then a Visium portfolio manager, who made his own illegal trades, prosecutors said.
"Sadly these are schemes we see time and time again, where lies and use of non-public information profits those conducting the crimes, and everyday investors lose out," FBI Assistant Director-in-Charge Diego Rodriguez said in a statement.
Prosecutors also accused Plaford and Stefan Lumiere, another former Visium portfolio manager, of fraudulently inflating the value and liquidity of a bond fund they oversaw by getting "sham" price quotations from brokers, in an effort to prevent investors from demanding their money back.
"AN INNOCENT MAN" Continued...