Hedge fund manager charged with reaping $32 million profit from Washington-style insider trading scheme

NEW YORK — Federal prosecutors on Wednesday charged a hedge fund manager with engaging in a Washington-style insider trading scheme, allegedly reaping a $32 million profit using confidential government information.

The scheme involved Sanjay Valvani, a 44-year-old New York hedge fund manager, and Gordon Johnston, 64, of Olney, Md., who spent more than a decade working at the Food and Drug Administration, according to allegations filed in a complaint by the Securities and Exchange Commission and the U.S. Attorney of Manhattan. Johnston served as a “political intelligence” consultant to Valvani, making as much as $5,000 a month for bringing the hedge fund manager confidential information mined from his relationships with former FDA colleagues, the complaints alleged.