Tuesday, September 27, 2011

FDA insider trader to plead guilty - court papers | Reuters

(Reuters) - A U.S. Food and Drug Administration chemist plans to plead guilty to charges he used secret information about pending drug approvals to make millions of dollars, according to court documents filed on Monday.

Cheng Yi Liang, 57, was accused of buying and selling stock in more than 25 companies with confidential FDA information to rack up more than $3.77 million in profits and avoided losses, according to court papers filed in federal court in Maryland.

Prosecutors filed a criminal information, typically used in guilty pleas, charging him with two counts of insider trading and making false statements. He bought and sold the stocks using the secret information between July 2006 and March 2011.

In March, prosecutors accused Liang and his son, Andrew, of insider trading. Prosecutors moved to dismiss the charges against the son, though last week he pleaded guilty to a separate charge of possession of child pornography.

Cheng Yi Liang examined documents about the progress of experimental drugs using an FDA database that includes confidential and non-public documents about trials, studies and correspondence, according to the criminal information.

Information about prescription drug approvals or denials can prompt big stock swings and has been the subject of other insider trading cases, though it is rare for such a case to involve a government employee.

The cases are: USA v Cheng Yi Liang, No. 11-cr-530; USA v Andrew Liang, No. 11-cr-501, and SEC v Liang, No. 11-cv-00819 in U.S. District Court for the District of Maryland. (Reporting by Jeremy Pelofsky; Editing by Richard Chang)

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