Former Mylan executive from McDonald pleads guilty to insider trading

A former Mylan executive pleaded guilty Friday to insider trading that netted him more than $4 million.

Dayakar Mallu, 51, now of Orlando, will be sentenced by U.S. District Judge W. Scott Hardy on Jan. 24.

According to the plea agreement, Mallu faces a sentencing guideline range of 57 to 71 months incarceration and has agreed to pay $4.8 million.

The case was initially filed under seal last month. The plea hearing was not listed on the online calendar for U.S. District Court in Pittsburgh on Friday.

Mallu’s attorney, Aitan Goelman, said late Friday that he had no comment.

Mallu, formerly of McDonald, was tipped off by Mylan’s chief information officer four separate times about an acquisition and two FDA drug applications over a year-and-a-half period, court records show, allowing him to illicitly gain $7.3 million.

Mallu worked for Canonsburg-based Mylan from May 2011 until March 2017. For the last three years of that time, according to the criminal information filed against him, Mallu served as vice president of global operations information technology.

In that role, he reported to Mylan’s chief information officer, the filing said, with whom he had an outside relationship including attending family events together and serving as partners in an outside business. The criminal information lists the CIO as an unnamed co-conspirator. A federal Securities and Exchange Commission complaint filed against Mallu on Friday identifies that person as a “senior manager.”

The chief information officer lived in Upper St. Clair and was hired to head Mylan’s IT operations in September 2014, court documents said.

The criminal information alleged that Mallu conspired together with the CIO in an insider trading scheme beginning in September 2017.

According to the SEC complaint, Mallu received the tips between September 2017 and July 2019. The first one occurred when the senior manager learned that Mylan’s generic option for Copaxone, a multiple sclerosis treatment, was about to be approved by the FDA.

That same day, Sept. 29, 2017, Mallu bought nearly $800,000 in Mylan stock, the government said.

Four days later, the FDA approval was announced, and Mallu’s stock value increased by nearly $700,000.

In January 2019, the senior manager alerted Mallu that the generic asthma drug, Wixhela Inhub, was about to be approved.

Mallu bought 1,000 shares of Mylan call option contracts for $38,000, and a day later, when the approval was announced, the value increased by $84,000.

Then, on Jan. 30, 2019, the senior manager learned that Mylan was going to announce lower-than-expected financial results.

“The senior manager knew that this would have a negative impact on Mylan’s stock price and, several weeks later, tipped this information to Mallu using a secure messaging and calling application so that Mallu could trade on it,” the SEC complaint said.

Mallu was able to conduct transactions to protect against the potential loss, the government said.

The last tip related to the merger between Mylan and Pfizer’s generic business, Upjohn, in November 2020 to form Viatris Inc.

Mallu used the information provided by the senior manager about the merger to buy call option contracts for $8.4 million.

When the merger was announced, Mallu’s options value increased by $2.2 million.

According to the SEC filing, on several occasions, Mallu paid the senior manager in Indian rupees.

“The senior manager directed Mallu to make these payments in person, in India, in cash in order to avoid detection,” the complaint said.

As a result of the trades, the criminal information said, Mallu realizd net profits of $4.2 million, which he shared with the co-conspirator.

The two of them, the document continued “engaged in cash transactions in foreign currency, used trusted intermediaries to exchange the cash in a foreign country and used untraceable methods of communication to conceal the illegal nature of, and profits from, their conspiracy,” the criminal information said.

Viatris said in a statement, “We are aware of the actions taken by the government today with respect to Mallu, a former employee of Mylan. The company is committed to the highest standards of integrity and compliance with the law. The company has been fully cooperating with the authorities. We are not in a position to comment further on this matter.”

Mallu also pleaded guilty to filing a false tax return related to a computer programming company he owns in Farmington Hills, Mich., named Opel LLC.