Former FDA Official Embroiled In Insider-Trading Case Over Generic-Drug Approvals
Gordon Johnston made as much as $5,000 a month to bring confidential information to hedge fund manager Sanjay Valvani, according to allegations filed in a complaint by the Securities and Exchange Commission and the U.S. Attorney of Manhattan. Federal investigators have been scrutinizing communications between Washington research firms and Wall Street investors for years but struggled to build the cases partly because of unclear rules on what's considered confidential information.
The Wall Street Journal:
Visium Insider-Trading Case Ensnares Former FDA Official
A hedge-fund insider-trading case has ensnared a former Food and Drug Administration official, one of the first criminal actions focused on how Wall Street gathers information from Washington. Federal prosecutors on Wednesday unveiled charges against a current and a former portfolio manager of hedge- fund firm Visium Asset Management LP, accusing them of trading on confidential government information about generic-drug approvals. (Viswanatha and Matthews, 6/15)
The Washington Post:
Hedge Fund Manager Charged With Reaping $32 Million Profit From Washington-Style Insider Trading Scheme
Federal prosecutors on Wednesday charged a hedge fund manager with engaging in a Washington-style insider trading scheme, allegedly reaping a $32 million profit using confidential government information. The scheme involved Sanjay Valvani, a 44-year-old New York hedge fund manager, and Gordon Johnston, 64, of Olney, Md., who spent more than a decade working at the Food and Drug Administration, according to allegations filed in a complaint by the Securities and Exchange Commission and the U.S. Attorney of Manhattan. Johnston served as a “political intelligence” consultant to Valvani, making as much as $5,000 a month for bringing the hedge fund manager confidential information mined from his relationships with former FDA colleagues, the complaints alleged. (Merle, 6/15)