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Biotech / Medical : Biotech Valuation -- Ignore unavailable to you. Want to Upgrade?

To: Biomaven who wrote (8993)	8/25/2003 5:38:52 PM
From: Biomaven	Read Replies (2) \| Respond to of 52153

Just a clarification - I believe the "profits" can be entirely notional. For example, assume 100 shares bought at $10, another 100 bought at $15, and 100 share sales also at $10 and $15, all within a six month period. "Real" profit is of course zero, but under this provision (I think!) the $10 purchase gets matched with the $15 sale and there is a $500 "profit" to be returned to the company. Peter

To: Biomaven who wrote (8993)	8/25/2003 5:42:57 PM
From: scaram(o)uche	Read Replies (1) \| Respond to of 52153

>> The only issue here will likely be if the Sacane Group denies it was always a group << Can you please clarify? I've looked everywhere I can think of to find something relating to what you call the "atribution" issue (or whatever you call it). Durus filed a ton of form 3s and form 4s on Friday. I haven't looked at all of them, but.... buy low, sell lower........ sec.gov If it is a "group", can you point to other members of such? Thanks.

To: Biomaven who wrote (8993)	8/31/2003 8:40:17 AM
From: dalroi	Respond to of 52153

Peter, - my distant recollection is that there are different ways to match the buys and sells that might produce different net profit - but the general method is to match them so as to maximize the total (assumed) profits. I Called aksy to veryfy they said gains of durus on trading alone is around 5 million calculated as follow take higest selling price - lowest buying price take next higest - next lowest etc this 5 million doesnt take into account the none realised gains cheers Stefaan

To: Biomaven who wrote (8993)	8/31/2003 4:04:03 PM
From: RCMac	Respond to of 52153

Section 16(b) damages: The actual calculation of the profit can be tricky - my distant recollection is that there are different ways to match the buys and sells that might produce different net profit - but the general method is to match them so as to maximize the total (assumed) profits. Peter, Stefaan, Tuck, Here is a several years old law review article on calculating damages under Section 16(b): unclaw.com Excerpt: "In Gratz v. Claughton, [FN20] a [1951] Second Circuit case . . ., the court emphatically underlined Smolowe's "maximum possible profit" reading of section 16(b). In Gratz, Judge Learned Hand affirmed the judgment of a master who interpreted Smolowe to require the matching of transactions "in such a way as to increase [profits] to the greatest possible amount." [FN21] Maximum liability was appropriate, according to Hand, because "the statute makes the fiduciary a constructive trustee for any profits he may make." [FN22] Noting also that any uncertainty in the short-swing profit calculation arose from the defendant's actions during the six-month trading period, Hand concluded that all uncertainty must be resolved against the defendant and that "the upper limit" should be taken as the amount of damages. [FN23] "Because Gratz is still good law, Smolowe [Second Circuit, 1943] should be read as holding that in short-swing profit calculations under section 16(b), transactions should be matched to produce the maximum possible profit." I believe that this Second Circuit law is harsher on defendants than the rules in other circuits. And where did ESPR file its suit? Not at home in Michigan, in the Sixth Circuit, although it had the unquestioned right to do so. Instead, ESPR chose to file suit in Connecticut, where where the defendants Durus Capital Management and Scott Sacane are located (in South Norwalk), in the Second Circuit. Presumably, ESPR did so not to be neighborly but to take advantage of the Second Circuit's favorable, perhaps draconian, damages rule. Smart company, and well advised, IMO. As you say, Peter, a 16(b) lawsuit is usually open-and-shut: plaintiff needs to show (1) defendant(s) are subject to 16(b) [here, 10% shareholder], and (2) defendant(s) made purchases and sales of ESPR stock within 6 months of each other [admitted in the SEC filings]. THAT'S IT. There are no issues of knowledge or intent, or anything else. Summary judgment should be easily granted as to liability. No problem. No long delays in litigation. Liability and substantial damages are so clear that the parties are undoubtedly talking settlement already, without a pause for posturing. And the fact that Durus's liability is so clear means, I think, that ESPR can probably demand, and get, pretty much any reasonable terms it wants, including (1) payment of damages, (2) agreements not to sell ESPR except on some agreed, non-dumping, schedule, and potentially (3) the turnover to ESPR of some of the ESPR stock held by Durus and affiliates in lieu of some of those damages. In other words there's plenty of flexibility for ESPR to obtain an early settlement that both (1) adds something to ESPR's treasury (making up for the harm to ESPR's secondary offering, which went out at $16 after Durus' revelations, instead of $20/share), and (2) at least limits Durus's sales of ESPR stock.