A U.S. Food and Drug Administration chemist and his son were arrested and charged on Tuesday with using sensitive inside information from the agency to profit on drug approval decisions, U.S. authorities said.
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Cheng Yi Liang and his son Andrew reaped more than $2.27 million involving five pharmaceutical companies between November 2007 and March 2011, including $1 million off the FDA's approval of Vanda Pharmaceutical's (VNDA.O) drug Fanapt, the Justice Department said.
The father was able to monitor confidential information about whether and when the FDA was about to approve certain drug applications, and then they used several brokerage accounts to execute trades, prosecutors said.
The Securities and Exchange Commission also filed its own complaint accusing the two of illegally trading in advance of at least 27 public announcements involving 19 publicly held companies, reaping $3.6 million in profits and avoided losses.