Former Chief Financial Officer of $21 Billion Biopharmaceutical Company Admits Insider Trading
For Immediate Release
U.S. Attorney's Office, District of New Jersey
NEWARK, N.J. – The former chief financial officer for a biopharmaceutical company today admitted his role in an insider trading scheme, U.S. Attorney Philip R. Sellinger announced.
Usama Malik, 48, of Washington, D.C., pleaded guilty today before U.S. District Judge John Michael Vazquez in Newark federal court to Count One of an indictment charging him with securities fraud/insider trading.
According to documents filed in this case and statements made in court:
From 2018 through October 2020, Malik was the chief financial officer (CFO) of a New Jersey-based biopharmaceutical company listed on the NASDAQ Stock Exchange. On April 6, 2020, the company publicly announced for the first time that its breast cancer drug – an antibody-based drug designed to treat certain breast cancer patients who had very limited treatment options beyond chemotherapy – had proven effective in pre-market clinical trials. In October 2020, another biopharmaceutical company acquired the company for which Malik worked for approximately $21 billion.
Malik was among the first, and one of the few, employees who received material non-public information about the breast cancer drug before the public announcement. Within minutes of obtaining that information, Malik passed it along to Lauren S. Wood, 34, also of Washington, D.C. Wood lived with Malik at the time and was formerly employed by the same company as him. Before April 6, 2020, and within hours of receiving the insider information from Malik, Wood placed an order for approximately 7,000 shares of the company’s stock, despite the fact that during the same time period the company’s stock was downgraded by financial experts. After the company announced that its cancer drug had proven effective in pre-market clinical trials, its stock price increased. After selling her shares, Wood realized a significant profit.
The count to which Malik pleaded guilty is punishable by a statutory maximum penalty of 20 years in prison and a maximum fine of $5 million. Sentencing is scheduled for Sept. 18, 2023.
Wood pleaded guilty on June 22, 2022, to an information charging her with securities fraud/insider trading. She is scheduled to be sentenced on Dec. 18, 2023.
The U.S. Securities and Exchange Commission (SEC) also filed a civil complaint on Dec. 1, 2021, based on the same conduct.
U.S. Attorney Sellinger credited special agents of the FBI, under the direction of Special Agent in Charge James E. Dennehy in Newark, with the investigation leading to the guilty plea. He also thanked the SEC Enforcement Division, under the leadership of Director Gurbir S. Grewal, and the FBI in the District of Columbia and the Eastern District of Virginia, for their assistance.
The government is represented by Assistant U.S. Attorneys Joshua L. Haber, Chief of the Economic Crimes Unit, and First Assistant U.S. Attorney Vikas Khanna.
Updated May 17, 2023
Securities, Commodities, & Investment Fraud