Very interesting front page WSJ article today about the biotech shorters and the lengths to which they will go:
Message 17850655
This quote is particularly relevant:
Such activity could be considered insider trading if the research analysts misappropriated clinical-trial information or obtained it under false pretenses, then traded on it or passed it along to someone who did, says Daniel J. Kramer, a specialist on insider-trading law at Paul, Weiss, Rifkind, Wharton and Garrison. The information would have to be material, meaning substantial enough to influence the stock price, he adds.
Not just an insider-trading issue - perhaps also a stock manipulation issue:
----------
Rule 10b-5 -- Employment of Manipulative and Deceptive Devices
--------------------------------------------------------
It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,
To employ any device, scheme, or artifice to defraud,
To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or
To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person,
in connection with the purchase or sale of any security.
------
Unclear of course whether this is something that would interest the SEC right now - they are presently more concerned with the bad-apple CEO's. But presumably a private action might be feasible.
Maybe RCMac would like to comment?
Peter |
