Cheng Yi Liang is a 57 year-old chemist employed by the FDA. One thing he picked up on over the years? That there’s a lot of cheddar to be made off drug companies. Particularly if one’s got information ahead of the masses, which CYL did. And why should his position preclude him from putting money to work in the sector, Liang probably asked himself? It shouldn’t which is why he set up seven different brokerage accounts and started making some pretty profitable trades based on his ‘edge,’ and is also why the SEC and the DOJ are now on his ass.
Cheng Yi Liang, 57, made trades involving 19 companies from as early as July 2006 in advance of at least 27 announcements of FDA decisions on drug applications, the SEC said in a lawsuit filed today at U.S. District Court in Greenbelt, Maryland. The chemist, who worked for the FDA’s Center for Drug Evaluation and Research, violated his duty as a federal employee not to engage in financial transactions using nonpublic government information and not to use such information for his personal benefit, according to the SEC, which is seeking disgorgement of illegal profits and unspecified fines.
Liang profited from share purchases ahead of 19 positive announcements and on short sales before six negative decisions, the SEC said in its suit. He also avoided losses by selling stock before two other negative announcements, the agency said. Rather than use his own or his wife’s brokerage accounts, Liang directed the trading through seven accounts held by other people, the SEC said. Most of the proceeds were transferred to Liang’s bank account, according to the lawsuit.