Public biopharma companies have to put in a lot of effort to safeguard sensitive information. Since we have so many big, important binary events in our business (clinical trial results, sales figures for individual drugs, and so on), you really have to keep that stuff from getting out and around.
Which means that there's also a strong incentive for such things to leak. One could do very well for one's self, if one were not so concerned with being forced to disgorge all of one's profits, and even spending one's time in the slammer. And those factors completely neglect one's sense of ethics, assuming that one has any. These concerns are brushed aside strictly on a risk basis, one understands:
John Lazorchak, 42, director of financial reporting at Celgene, regularly tipped others to nonpublic information on acquisitions, quarterly earnings results and regulatory news, according to a Federal Bureau of Investigation complaint filed yesterday in federal court in Newark, New Jersey.
Mark Cupo, 51, the director of accounting and reporting at Sanofi-Aventis, now known as Sanofi; and Mark Foldy, 42, a marketing executive at Stryker Corp., also were charged. Prosecutors said most of the profit went to Lawrence Grum, 48, and Michael Castelli, 48, who also tipped friends and family. The case involves two sets of high school friends and at least one witness who secretly recorded Grum for the FBI.
Oh, dear. The total profit, in this instance, is about $1.5 million, and standards vary, but even if I had ethical problems I wouldn't run such risks for a share of that amount. Or the full amount, either. But as this Bloomberg story details, insider trading seems to have become a rather more democratic activity over the years, and the amounts of money involved have changed accordingly. Perhaps the people involved are thinking that these sums are too small to be noticed, by the standards of Wall Street and the SEC, and that they'll have a better chance of getting away with the trades.
Not so. I knew someone once who was having a dispute with the IRS, and was (by my standards) insufficiently concerned about his situation. "I'm just a little guy", was the response, "they don't care about someone like me". What I told him was "Whales eat plankton, you know". In that spirit, that second link gives the grim details of a case involving an employee at Seattle Genetics, and it could serve as the template for many others like it. It's a sad story. Most of them are.