The investigation is the latest to focus on a lucrative form of Washington consulting in which “political intelligence” firms leverage their connections on Capitol Hill and inside executive agencies to deliver valuable information to investors. The SEC launched an investigation into the information passing between such firms and Wall Street in 2013.

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“Valvani and his hedge funds made millions by trading on nonpublic FDA drug approval information not available to the rest of the stock market,” Andrew J. Ceresney, director of the SEC’s division of enforcement, said in a statement.

Johnston pleaded guilty to securities fraud and other charges earlier this week, according to the U.S. attorney’s office. His attorney declined to comment. But Valvani’s attorney, Barry H. Berke, disputed the allegations.

“Sanjay Valvani is an innocent man whose investment decisions were always based on rigorous and entirely appropriate research and analysis, consistent with his high integrity,” Berke said in a statement. The case “is yet another example of this United States Attorney’s office stretching the facts and law to try to transform entirely innocent trading decisions into a crime.” Valvani faces up to 20 years in prison under the charges filed Wednesday.

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According to court documents, Johnston spent more than a decade at the FDA, including serving as deputy director for generic drugs. After leaving the agency, Johnston took up dual roles. He served as vice president of the Generic Drug Trade Association and as a consultant to Valvani. But Johnston did not tell the association or his former FDA colleagues about his relationship with the hedge fund manager, which allegedly netted him hundreds of thousands of dollars.

“Johnston knew that this deceit was necessary” to keep an open channel of communication with an unnamed FDA official, according to the SEC complaint.

Through his relationship with the FDA employee, Johnston obtained confidential information about the FDA’s plans to approve the production of enoxaparin, a generic drug that helps prevent the formation of blood clots, according to court documents. Valvani used that information to invest in health-care stocks and reap a big profit.

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Valvani also shared the information with another hedge fund manager, Christopher Plaford, who used the tip to turn a $300,000 profit. Plaford is cooperating with the investigation and has pleaded guilty, according to court documents. Plaford’s attorney, David Scott Smith, declined to comment.