Ex-Mylan Executive Pleads Guilty Over Insider-Trading Allegations
Dayakar Mallu received illicit tips on drug approvals, earnings and merger
WASHINGTON—A former technology executive of generic drugmaker Mylan NV pleaded guilty Friday to allegations that he illicitly traded in the company’s securities using tips from another company insider.
Dayakar Mallu, a former vice president of global operations information technology, earned $4.2 million by trading on lucrative information from Mylan’s former chief information officer, who was his boss at the company, according to a charging document filed in federal court in Pennsylvania. Mylan merged with Pfizer Inc.’s Upjohn business last year to form a new company, Viatris Inc.
Mylan’s former chief information officer, who wasn’t named in court records, shared with Mr. Mallu undisclosed news about drug approvals, quarterly earnings announcements and Mylan’s plans to merge with Upjohn, according to the Securities and Exchange Commission, which also sued Mr. Mallu in federal civil court.
Mr. Mallu, 51 years old, traded options to profit on the tips and shared income with the former chief information officer, the SEC said. He tried to conceal the payments by making them overseas in Indian rupees, according to authorities. The two swapped information using messaging apps that were supposed to keep their communications secret, according to the SEC.
Mr. Mallu pleaded guilty to one count of conspiracy to commit securities fraud and one count of filing a false tax return. He is scheduled to be sentenced in January and faces a maximum prison term of 25 years for the conspiracy offense and three years for the tax charge, according to the Justice Department. An attorney for Mr. Mallu, who left Mylan in 2017, declined to comment.
The SEC said its investigation is continuing. For years the regulator has refined its ability to use technology to identify suspiciously well-timed trades in market data. Regulators maintain several databases that allow them to pick out trades and even identify groups of traders who might be involved in a scheme.
“This case highlights the agency’s ability to use sophisticated data analysis to detect suspicious trading patterns and identify the traders behind them,” said Scott Thompson, acting co-regional director of the SEC’s Philadelphia office.