SEC Charges Pharmaceutical Co. Chief Information Officer in $8 Million Insider Trading Scheme
The Securities and Exchange Commission announced insider trading charges against Ramkumar Rayapureddy, Chief Information Officer of pharmaceutical company Viatris Inc., which was formerly known as Mylan N.V.
The SEC’s complaint, filed in the United States District Court for the Western District of Pennsylvania, alleges that, from at least September 2017 through July 2019, Rayapureddy, a resident of Pennsylvania, tipped his friend and former colleague, Dayakar Mallu, material nonpublic information about Mylan’s unannounced drug approval by the U.S. Food & Drug Administration, financial results, and an impending merger with a division of Pfizer Inc. The complaint further alleges that Mallu generated gains totaling nearly $8 million and avoided losses by trading Mylan securities based upon Rayapureddy’s tips and shared a portion of his profits with Rayapureddy through cash payments in India. The SEC previously charged Mallu in connection with this investigation.
“As the officer of a public company, Rayapureddy had a duty to safeguard material nonpublic information concerning significant Mylan events, but, as our complaint alleges, he violated this duty by tipping his friend in exchange for cash kickbacks,” said Nicholas P. Grippo, Regional Director of the SEC’s Philadelphia Regional Office. “The SEC remains committed to finding, investigating, and charging public company executives who engage in insider trading.”
The SEC’s complaint charges Rayapureddy with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and seeks a permanent injunction, disgorgement, a civil penalty, and an officer and director bar.
In a parallel action, the Department of Justice’s Fraud Section today announced criminal charges against Rayapureddy.
The SEC’s investigation was conducted by Christine R. O’Neil, Matthew B. Homberger, and Brian R. Higgins of the Philadelphia Regional Office and John S. Rymas of the Market Abuse Unit. It was supervised by Brendan P. McGlynn, Scott A. Thompson, and Mr. Grippo. The litigation will be led by Christopher R. Kelly and Gregory Bockin. The SEC appreciates the assistance of the Financial Industry Regulatory Authority and the Options Regulatory Surveillance Authority.