The Securities and Exchange Commission recently charged a former pharmaceutical company executive and his longtime friend with insider trading, alleging that the friend generated more than $1 million in illicit profits by trading on tips from the former executive.         

Defendant Saran Sabrdaran was the former director of Drug Safety Risk Management at InterMune Inc., a public pharmaceutical company headquartered in California. According to the complaint, Sabrdaran was part of a small group of employees charged with shepherding InterMune’s drug Esbriet through the regulatory process for marketing the drug in the European Union. In this role, Sabrdaran became privy to material non-public information about the drug’s progress in the regulatory process, and allegedly tipped this information to his close friend, Defendant Farhang Afsarpour. Before a public announcement about the drug’s approval, Afsarpour allegedly bought InterMune common stock and urged other friends to buy additional InterMune securities. Following the public announcement, InterMune’s stock prices soared, resulting in more than $1 million in illicit profits for Afsarpour. 

The SEC’s complaint charged Sabrdaran and Afsarpour with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The SEC seeks disgorgement, prejudgment interest, financial penalties and injunctions. Additionally, the SEC seeks an officer-and-director bar against Sabrdaran. 

SEC v. Sabrdaran and Afsarpour, No. 3:14-cv-4825 (N.D. Cal. Oct. 30, 2014).