Thursday, June 16, 2016

Call me naive...

The news of insider trading always stumps me. From STAT's Ed Silverman:
Last Aug. 17, Jason Chan started his job as a director of biostatistics at a small biotech called Akebia Therapeutics. Just two days later, he began buying Akebia stock based on information he learned about study results for a key drug while attending meetings. 
Within days, his wife and a friend to whom he owed money also began buying shares. 
The US Department of Justice charged Chan on Tuesday with securities fraud. And the US Securities and Exchange Commission filed a lawsuit against Chan alleging insider trading and wants him to return $68,000 in illegal profits as part of a scheme that netted his wife $115,000 and the friend another $105,000, according to the lawsuit, which was filed Tuesday in federal court in Boston.
Maybe I am completely naive and fooled and the SEC can barely catch all the people who are insider trading, but it sure seems like a whole lot of people get caught doing that. What are they thinking?!?! 

6 comments:

  1. Re btech insider trading (from a very smart, and decent, guy): http://www.forbes.com/sites/davidsable/2016/06/16/the-biotech-insider-trading-scandal-how-stat-news-missed-the-real-story/#7a2b0eca79b4

    Also a recent case with Visium and an ex FDA director. As with any sport/business, there are some bad guys, but mostly ppl play by the rules.

    The galling aspect of the SEC's fecklessness, IMO, is lack of enforcement of rules surrounding research colluding with bankers (FINRA 2711). The # of buy ratings on stocks that get banking fees (check # of positive reports 25 days after an IPO, from underwriters of IPO) is so glarinlgy collusion my 2 year old could figure it out, and yet the SEC can't see it. Amazing.

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  2. Equally troubling is "The pill met its primary endpoint in a mid-stage trial, a development that was discussed in meetings that Chan attended right after joining the biotech. But results were not released until last Sept. 8.". Per SEC rules, companies have 3 business days to disclose material information. Seems odd to me that it took several weeks.

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  3. People who got burned by Chinese small caps often complain that the SEC does not do enough. Fake Chinese companies get listed on our exchanges. And people like Michael Toups (an American CFO) get away with blatantly misleading investors.

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  4. What are they thinking? Maybe that the entire financial system was (allegedly) about to collapse a few years ago and the only people I remember doing time were Martha Stewart (small potatoes) and Bernie Madoff (too criminal even for the SEC). Those are pretty good odds.

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    1. Matthew MArtoma got 9 years for insider trading on ELN, and there were these idiots who got caught trading SQNM (http://www.cbs8.com/story/13650022/guilty-pleas-for-insider-trading-at-local-bio-tech-firm), and this moron http://www.fiercebiotech.com/regulatory/bristol-myers-exec-sentenced-to-a-year-prison-on-insider-trading-scheme, and this fool http://www.reuters.com/article/merck-insidertrading-idUSL1N11M2AE20151014.

      DK I'd want to risk prison for, relatively, paltry sums.

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    2. If you're implying that the big fish are never caught ("too big to") and the small fry that are on the outside are easily burned to make the system look "legit" then I think you're on to something.

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