SEC probes possible insider trading on drug data
WASHINGTON (Reuters) – The U.S. Securities and Exchange
Commission is looking at whether insider trading laws were
broken prior to Food and Drug Administration decisions on
potential blockbuster drugs, an SEC official said on Tuesday.
The matter was highlighted recently by a top Republican
lawmaker, who urged the SEC and the Justice Department to look
into a newspaper report that investors had paid researchers to
reveal confidential information about ongoing drug studies.
The Seattle Times earlier this month said medical
researchers received up to $500 per hour to tell brokerages and
hedge funds about a drug’s likely success and marketability.
The newspaper said it had found 26 cases in which doctors
“leaked confidential and critical details” of their research to
Wall Street players, enabling them possibly to profit from
stock price moves after drug trial results became public.
“The latest revelations have been added to the ongoing
review of possible insider trading involving potential
blockbuster drugs in advance of FDA decisions,” the SEC
The probe is focused on whether any material nonpublic
information on drug studies changed hands and resulted in
actual trades prior to public announcements of study results.
Last year the SEC said it had improved its cooperation with
the FDA after insider trading violations involving ImClone
Systems Inc. founder and former Chief Executive Sam Waksal.
Waksal tried to sell more than 70,000 ImClone shares and
was accused of tipping off family and friends — including
lifestyle trendsetter Martha Stewart — just before news that
the FDA had rejected the company’s colon cancer drug, Erbitux,
was made public in late December 2001.
Under the interagency cooperation agreement, the FDA will
assist SEC staffers at the Division of Corporation Finance,
which reviews commission filings, and provide documents and
information to the SEC’s enforcement division.