In a plea bargain Tuesday, Cheng Yi Liang pleaded guilty in federal court to one count of securities fraud and one count of making false statements related to his insider trading of 19 drug companies across the U.S. including MannKind Corp. of Valencia.

The drug companies were not involved in any wrongdoing.

In a complaint filed in March, the Securities and Exchange Commission alleged that the Maryland resident was employed since 1996 as a chemist at the Food and Drug Administration’s Office of New Drug Quality Assessment (NDQA), where he had access to the FDA’s internal tracking system of new drug applications.

The SEC alleges that Yi Liang and his co-conspirators – mostly family members, some living in China – traded ahead of 27 announcements of FDA decisions on 19 publicly traded companies’ applications for approval of new drugs.

In the process, they made illegal profits or avoided losses to the tune of $3,776,152, the SEC alleges. His biggest gain came in May 2009 when the FDA announced its approval of Maryland-based Vanda Pharmaceuticals’ drug, Fanapt. The Liangs allegedly translated that knowledge into an 800-percent profit, netting more than $1 million.

In MannKind’s case, Yi Liang is accused of illicitly cutting his loss to only $60,047 thanks to his advance knowledge that the FDA was going to deny the company’s application for approval of Afrezza, its proposed treatment for hyperglycemia in adult type-1 and type-2 diabetes patients.

MannKind, whose stock trades on the NASDAQ, applied for approval of the drug Jan. 4 and was denied Jan. 19 in a letter instructing the company to conduct two clinical trials – which the company is doing. If approved, Afrezza would be MannKind”s first product.

In his plea bargain, Yi Liang agreed to forfeit his home and condominium in Maryland and 10 investment accounts. He is scheduled for sentencing Jan. 19 and faces 20 years in prison and a $5 million fine for securities fraud, and five years and $250,000 for false statements.