By ALICIA MUNDY And BRENT KENDALL
WASHINGTON—A longtime chemist at the Food and Drug Administration was charged Tuesday with insider trading by federal authorities, who alleged he made as much as $3.6 million trading drug company stocks based on confidential drug-approval information.
The Securities and Exchange Commission filed civil charges against Cheng Yi Liang, 57, an FDA employee since 1996, alleging he illegally traded in advance of at least 27 different FDA announcements involving 19 publicly traded companies.
The Justice Department filed related criminal charges and also charged Mr. Liang’s son, Andrew Liang, in the case. Both are residents of Gaithersburg, Md.
The charges stunned the FDA. Mr. Liang works in the division in charge of approving new drugs, the agency’s most visible and sensitive role. The pharmaceutical industry has long worried about security in this area, given how much secret corporate information is shared with employees at the agency.
“This is the kind of stuff I lost sleep over,” said former FDA commissioner David Kessler, because pharmaceutical companies and Wall Street depend on FDA officials never using their proprietary knowledge “to play the market.”
The SEC and the Justice Department said the men traded shares dating back to 2006 of companies whose drugs were used for colon cancer, schizophrenia, insomnia, severe constipation, osteoarthritis and heart disease.