Former Chief Financial Officer and Former Head of Corporate Communications of $21 Billion Biopharmaceutical Company Arrested for Insider Trading
NEWARK, N.J. – The former chief financial officer and the former head of corporate communications for a biopharmaceutical company were arrested for their roles in an insider trading scheme, Acting U.S. Attorney Rachael A. Honig announced today.
Usama Malik, 47, and Lauren S. Wood, 33, both of Washington, D.C., are charged by complaint with securities fraud. Malik and Wood were both arrested on Dec. 1, 2021. Malik is scheduled to appear this afternoon by videoconference before U.S. Magistrate Judge Zia Faruqui in Washington, D.C., federal court. Wood is scheduled to appear this afternoon before U.S. Magistrate Judge John F. Anderson in Alexandria, Virginia, federal court.
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, Company-1 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, Biopharmaceutical Company-2 acquired Company-1 for approximately $21 billion.
As Company-1’s CFO, Malik was among the first, and one of the few, employees who received the material non-public information about the breast cancer drug before the April 6, 2020 announcement. Within minutes of obtaining that information, Malik passed it along to Wood, who lived with Malik at the time and was formerly the head of corporate communications for Company-1. Malik also provided the non-public information to a number of his relatives. Before April 6, 2020, and within hours of receiving the insider information from Malik, Wood placed an order for approximately 7,000 shares of Company-1 stock, despite the fact that Company-1 stock had recently been downgraded by financial experts. After Company-1 announced on April 6, 2020, that its cancer drug had proven effective in pre-market clinical trials, Company-1’s stock price increased. After selling her shares, Wood more than doubled her investment, realizing gross profits of $213,618, and returning $65,000 to Malik.
The securities fraud count carries a potential penalty of 20 years in prison and a $5 million fine.
The U.S. Securities and Exchange Commission (SEC) also filed a civil complaint today based on the same conduct.
Acting U.S. Attorney Honig credited special agents of the FBI, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark, with the investigation leading to the charges. She 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. Attorney Joshua L. Haber of the Health Care Fraud Unit and Deputy Chief of the Criminal Division Osmar J. Benvenuto.
The charges and allegations contained in the complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.