An Indian-American attorney and his wife have been charged in the US with insider trading after they used confidential information obtained from a corporate client about a pharmaceutical company and avoided thousands of dollars in losses.

California-based Shivbir Grewal and Preetinder Grewal agreed to pay $90,000 to settle the federal regulator US Securities and Exchange Commission's charges, and Shivbir also agreed to be suspended from practicing as an attorney before the SEC on behalf of any publicly traded company or other entity regulated by the agency.

"An attorney owes a client a duty of trust when presented with confidential information," said Michele Wein Layne, Director of the SEC's Los Angeles Regional Office.

"Shivbir attempted to avoid personal financial losses by breaching his duty to protect that nonpublic information, and in the end he pays a heavier price for exploiting it." The SEC alleges that while serving as outside counsel to a pharmaceuticals company last year, Shivbir learned that the company was on the brink of announcing a significant decline in expected revenue due to an unanticipated drop in orders for its top-selling drug.

Shivbir sold his entire investment in the company's stock within 48 hours of getting the nonpublic information from company officials who sought the disclosure advice of his law firm. He tipped his wife, who also sold all of her shares on the basis of the nonpublic information. The day after they sold their stock, the company issued a statement revealing the expectation of decreased sales of a drug and the consequent expectation of reduced revenue, and the company's stock price fell more than 35 per cent.

The couple avoided losses of nearly $45,000 by selling ahead of the bad news. The SEC's complaint alleges that the Grewals violated provisions of the Securities Act. Without admitting or denying the allegations, the Grewals agreed to be permanently enjoined from violating these provisions of the securities laws. Shivbir agreed to pay disgorgement and penalty of $30,343 each. His wife agreed to pay disgorgement and a penalty of $14,400 each.