The Securities and Exchange Commission has charged Sanjay Valvani, 44, with insider trading after he reaped unlawful profits of nearly $32 million by trading on pharma stocks on the basis of tips he received from Gordon Johnston, a former US government official who worked at the Food and Drug Administration and deceptively obtained confidential information about FDA approvals to produce enoxaparin, a generic drug that helps prevent formation of blood clots.
The SEC also alleges that Valvani tipped fellow hedge fund manager Christopher Plaford, who is charged in a separate complaint with insider trading.
Preet Bharara the US Attorney for the Southern District of New York also announced criminal charges against Valvani and Johnston.
Valvani has been charged on five counts including securities fraud, defrauding the US and wire fraud.
The charges also carry a maximum fine of $5 million.