This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

FDA Chemist Charged With Insider Trading

Stocks in this article: CLDA

NEW YORK ( TheStreet) -- U.S. Food and Drug Administration chemist Cheng Yi Liang was charged by the Securities and Exchange Commission Tuesday with insider trading on information regarding upcoming FDA drug approval decisions.

The SEC alleges that Liang illegally generated more than $3.6 million in illicit profits by trading with advanced knowledge on at least 27 public FDA drug approval decisions involving 19 publicly traded companies.

According to the SEC's complaint filed in the U.S. District Court for the District of Maryland, Liang traded in advance of FDA announcements concerning both the approval of new drugs and negative FDA decisions.

The complaint says that while working in the FDA's Center for Drug Evaluation and Research, Liang purchased shares for a profit before 19 positive FDA decision announcements and sold shares to avoid losses before two negative announcements.

In January 2011, Liang made a profit of approximately $380,000 in less than 15 minutes when he traded in advance of an FDA announcement approving Clinical Data's (CLDA) application for the drug Viibryd, the SEC alleges.

The SEC says that Liang used insider information about the FDA's review of Clinical Data's taken from the confidential FDA database to purchase more than 46,000 shares of Clinical Data at for more than $700,000.

After the market closed on Friday, Jan. 21, the FDA announced its approval of Viibryd, sending Clinical Data's stock price up more than 67%. The next week Liang sold his Clinical Data position to make $380,000, the news release says.

In an effort to conceal his insider trading, he allegedly traded in seven brokerage accounts under seven different names. The complaint names his wife, Yi Zhuge; his 84-year-old mother Hui Juan Chen; his son, Andrew Liang; and Shuhua Zhu, Zhongshan Chen and Honami Toda as the account holders for the seven trading accounts he used.

The SEC complaint alleges that Liang used the profits garnered from his insider trading for his own personal benefit. Checks totaling at least $1.2 million were written from his trading accounts to him or his wife, and nearly $65,000 worth of checks were written from the accounts to purchase vehicles later registered to Liang and his wife, the SEC charges.

--Written by Theresa McCabe in Boston.

>To contact the writer of this article, click here: Theresa McCabe.

>To follow the writer on Twitter, go to @TheresaMcCabe.

>To submit a news tip, send an email to:

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,085.46 +55.25 0.31%
S&P 500 2,091.24 +9.36 0.45%
NASDAQ 4,808.4920 +35.02 0.73%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs