U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23688 / November 14, 2016
Securities and Exchange Commission v. Sanjay Valvani and Gordon Johnston, Civil Action No. 16 Civ. 4512 (KPF) (S.D.N.Y. filed June 15, 2016)
SEC Announces Settlement with Former Government Official in Insider Trading Case
The Securities and Exchange Commission today announced that it entered into a settlement agreement with Gordon Johnston, a former official at the U.S. Food and Drug Administration's Office of Generic Drugs (OGD) who allegedly participated in an insider trading scheme while working as a trade association representative.
On June 15, 2016, the SEC filed a complaint in federal district court in Manhattan alleging that Johnston concealed his role as a hedge fund consultant to obtain confidential information from his former OGD colleagues and friends about anticipated FDA approvals for a drug called enoxaparin, which is a generic version of the brand name drug Lovenox. Johnston allegedly passed the material, nonpublic information to a portfolio manager at Visium Asset Management, L.P. (Visium), where Johnston earned approximately $108,000 as a paid consultant. The portfolio manager allegedly made millions of dollars illicitly trading on the nonpublic information that Johnston provided.
In the settlement, subject to court approval, Johnston agreed to pay disgorgement in the amount of $108,000 plus interest of $19,496.03 for a total of $127,496.03. The court, upon a motion by the SEC, could determine whether an additional financial penalty is appropriate against Johnston. Johnston agreed to be permanently enjoined from violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.
The SEC also filed notice with the court that it will no longer pursue charges against the portfolio manager, Sanjay Valvani, who has since died. The SEC's related cases continue against former Visium employees Christopher Plaford and Stefan Lumiere, who allegedly engaged in a scheme to mismark securities held by Visium.