SEC Charges Cardiologist With Insider Trading on Confidential Drug Trial Developments FOR IMMEDIATE RELEASE 2016-156 Washington D.C., Aug. 4, 2016 — The Securities and Exchange Commission today charged a cardiologist with insider trading on confidential developments as he worked on a clinical drug trial. The SEC alleges that Dr. Edward Kosinski of Weston, Connecticut, traded in advance of two negative news announcements by Regado Biosciences, which was pursuing a drug called REG-1 to regulate clotting in patients undergoing coronary angioplasty. Kosinski, who served as principal investigator of the drug trial, got advance notice that patient enrollment in the trial was being suspended because patients had experienced severe allergic reactions. He allegedly sold all 40,000 shares of his Regado stock the following day to avoid approximately $160,000 in losses when the news became public and the stock price dropped. A month later, Kosinski received advance notice that enrollment would be permanently halted because a patient had died, and he profited through options trades by betting the stock price would drop again. Kosinski allegedly made more than $3,000 when he exercised the options after the company’s stock fell by 60 percent upon the negative news. “We allege that Dr. Kosinski illegally sold all of his stock in the company to avoid thousands of dollars in losses when the bad news came out,” said Joseph Sansone, Co-Chief of the SEC Enforcement Division’s Market Abuse Unit. “Not content with avoiding heavy losses, Kosinski allegedly further enriched himself by placing options trades to profit when the company’s stock price dropped again on more bad news.” In a parallel case, the U.S. Attorney’s Office for the District of Connecticut today announced criminal charges against Kosinski. The SEC’s complaint filed in federal court in Connecticut charges Kosinski with violating antifraud provisions of the federal securities laws and related rules. The SEC’s investigation was conducted by Andrew J. Palid and Michele T. Perillo of the Market Abuse Unit in the Boston Regional Office, and the litigation will be led by Deena R. Bernstein. The SEC appreciates the assistance of the U.S. Attorney’s Office for the District of Connecticut, Federal Bureau of Investigation, and Financial Industry Regulatory Authority.
I don't exactly understand legal regulations of inside trading. What exactly can be considered "inside"? Being well-informed? And what should this guy do? Ignore the fact he's going to lose thousands bucks?
He shouldn't be investing in stocks for which he's doing make or break trials for. That's why law firms, consulting firms, and banks have personal trading policies.
"He shouldn't be investing in stocks" You got that right Whats friggin hilarious is,.... he only made $3000 in part 2 of his shenanigans. Give me $160,000 (plus) and inside info on when a biotech is gonna tank.....Islands here I come
The definition is pretty clearly defined, you can read it for yourself at http://www.ecfr.gov/cgi-bin/text-id...8&view=text&node=17:3.0.1.1.1.1.66.95&idno=17 and http://www.ecfr.gov/cgi-bin/text-id...8&view=text&node=17:3.0.1.1.1.1.66.96&idno=17 In general illegal insider trading occurs if "a person trades on the basis of material nonpublic information if a trader is "aware" of the material nonpublic information when making the purchase or sale." As to ignoring the facts and losing money, absolutely that's what you have to do if you took the risk of purchasing securities in which you have insider knowledge. If you can't handle that, don't trade in securities where you might have insider knowledge.
I would think that if those allegations can be proven in court, they must (and should) fall within any country's legal definitions of "insider trading"? Reading this makes me wonder whether pharmaceutical firms have regulations preventing clinical trial physicians and their families from dealing in the companies' stock while effectively in their "employment".
Not familiar with pharma but financial firms have pretty strict compliance departments and restrictions. Usually you can only trade in broad index open end mutual funds without prior approval, all other trades require compliance department approval before you trade and they won't grant it if the firm has any ties at all to that stock. They also require that you provide them full access to all your brokerage accounts and that duplicate copies of all your statements go to them. This applies to you and your spouse/significant other. Any attempt to circumvent these rules is going to get you fired absent some pretty good excuse or some rockstar performance on your part. I'd guess any pharma firm with any organization at all would have some similar rules and at the very least restrictions on sales of their own stock around trial events. Its possible that outside contractors either ignore these or slip through the cracks and possible that the more start-up level companies don't pay the attention to this that they should.