Doctor Jailed for Insider Trading
A doctor involved in a drug’s clinical trials was sentenced to prison and fined for trading on material nonpublic information.
The defendant, a principal investigator at a clinical site for the drug, failed to disclose, as required by agreement, that he had purchased 40,000 shares of the drug maker’s publicly-listed stock. Upon learning of negative trial information, he sold the stock and bought put options before the negative information was publicly disclosed. The SEC asserts that a signed confidentiality agreement triggered the doctor’s duty to the issuer.
No matter how smart you think you are, you are not going to get away with insider trading. The SEC is really good at uncovering stock price movement anomalies. Also, failing to report stock ownership as required by agreements or compliance questionnaires (e.g. Code of Ethics) just makes you look more guilty. This case is also a reminder to compli-pros that questionnaires and representations will not ferret out intentional wrongdoing.
Read the complaint here.