The US Securities and Exchange Commission on Thursday filed insider trading charges against the chief information officer of a pharmaceutical company in an alleged $8 million scheme, while the US Justice Department brought charges in the case.
The SEC said in its lawsuit that between September 2017 and July 2019, Ramkumar Rayapureddy, CIO of Canonsburg, Pennsylvania-based Viatris Inc., formerly known as Mylan NV, tipped Dayakar R. Mallu, a friend and former colleague, on material non- public information about Mylan’s unannounced drug approval by the US Food & Drug Administration, financial results and a pending merger with a Pfizer Inc. division.
Pfizer Inc. unit Upjohn Inc., which was Pfizer̵7;s proprietary brand and generic business, merged with Mylan in November 2020, according to a lawsuit filed in U.S. District Court in Pittsburgh in Securities and Exchange Commission v. Ramkumar v. Rayapureddy.
He was charged separately, in a parallel action, by the US Department of Justice.
The SEC complaint alleges that Mr. Mallu generated profits totaling nearly $8 million and avoided losses by trading Mylan securities based on Mr. Rayapureddy’s tip and shared a portion of his winnings with Mr. Rayapureddy through cash payments in India.
The SEC and the Justice Department previously accused Mr. Mallu, they said in their statements.
The SEC, which accuses Rayapureddy of violating federal securities laws, is seeking a permanent injunction, disgorgement, a civil penalty and a permanent bar against him as an officer or director of a public company.
He was charged by the Justice Department with one count of conspiracy to commit securities fraud and three counts of securities fraud, according to a separate DOJ statement.
If convicted, he faces a maximum sentence of 20 years in prison on each of the securities fraud charges and five years in prison on the conspiracy charge.
The Department of Justice said in September 2021 that Mr. Mallu pleaded guilty to conspiracy to commit securities fraud and aiding and abetting the preparation of a false tax return, and is awaiting sentencing.
Viatris did not respond to a request for comment.