FDA Chemist May Be Seeking Plea in Trading Case

The U.S. Food and Drug Administration  chemist charged with using inside information to reap stock market profits may be seeking a plea deal, according to a letter filed in court on Friday.

Cheng Yi Liang is accused of illegally trading in advance of at least 27 public announcements on drug approvals.

The Securities and Exchange Commission said he earned some $3.6 million in profits and avoided losses by trading on the information involving 19 companies.

In addition to an SEC civil complaint, Liang and his son Andrew were charged by the Justice Department for conspiracy as well as securities and wire fraud involving $2.27 million they made off trades in five pharmaceutical companies.

Liang sought to waive his right to a preliminary hearing on the charges "in order to give both the government and defense counsel time to discuss resolution of this matter," his public defender, Andrew Carter Jr., said in the letter.

Carter was not immediately available for further comment. A Justice Department spokeswoman declined to comment.

The case marked an unusual scheme in which a government employee used inside information to rake in stock profits.

Information about FDA drug approvals can prompt big stock swings and have been the subject of other insider trading cases.

Liang has worked at the FDA since 1996 in the Office of New Drug Quality Assessment and had access to the agency's internal tracking system for new drug applications. His salary was $122,744 a year, according to a court document.

He was able to monitor confidential information about whether and when the FDA was about to approve certain drug applications. He and his son used several brokerage accounts to execute trades, prosecutors said.

One account was in the name of Liang's 84-year-old mother, who lived in China, according to the SEC.

The case is USA v. Liang et al; No. 11-mj-1236 in U.S. District Court for the District of Maryland.