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Biotech / Medical : Biotech Valuation

CRSP 56.68

-2.4%

Dec 12 9:30 AM EST

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To: scott_jiminez who wrote (1964)	11/6/2000 12:20:11 PM
From: Biomaven	Read Replies (2) of 52153

what was the insider info/insider buying-selling rule prior to this change?. One BT example comes to mind: an insider just learned her/his paper will be published in Nature...an event that commonly leads to good press. Generally, if you possess material, non-public information, then you can't trade. This remains the case today except for this new "loophole." The issue becomes less clear if you aren't associated with the company and the information didn't come directly or indirectly from a source which owed a duty of confidentiality to the company. A significant forthcoming publication in Nature would probably count as material non-public information. This would likely also extend to employees of the publication and reviewers of the article. Where things get much less clear are situations like this: An employee of company A knows that they have developed a great drug that will severely impact company B's existing marketed drug. Can the employee short B's stock? One of the more famous cases was Dirks, in which a smart analyst found some dirt on a company (initially from some former insiders), complained to regulators and was ignored and then advised his clients to sell the stock. He was subsequently charged with insider trading! Unbelievably this case went all the way to the Supreme Court before he was finally absolved. This article (now a little dated) discusses some of the issues: brobeck.com Peter

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