Speaking of Our Corrupt Healthcare System

It appears that senior figures in biotech are are making incredible fortuitous investment decisions.

By, "Incredible," I mean that their "Luck," or, "Acumen," simply beggars belief:

The case was a bold step for the Securities and Exchange Commission.

In 2021, the agency accused Matthew Panuwat of insider trading. Five years earlier, he had learned that his own company, a biopharma operation called Medivation, was about to get acquired. But instead of buying shares in his employer, he bought options in a competitor whose stock could be expected to rise on the news. The agency says he made $107,000 in illicit profits.

For the first and so far only time, the SEC filed a case that accuses an executive of using secret information from his own company to trade in the stock of a rival. “Biopharmaceutical industry insiders frequently have access to material nonpublic information” that impacts both their company and “other companies in the industry,” Gurbir Grewal, the commission’s director of enforcement, warned in announcing the case. “The SEC is committed to detecting and pursuing illegal trading in all forms.”

One of the cornerstones of the agency’s case against Panuwat is that Medivation had a policy that explicitly barred employees from buying or selling competitors’ stock based on company information not available to ordinary investors.

It wasn’t just Panuwat who risked violating Medivation’s policy, a trove of confidential IRS data obtained in recent years by ProPublica shows.

It was also his then-boss, CEO David Hung.

………

Earlier this year, ProPublica revealed that some executives with access to nonpublic industry information had made remarkably well-timed transactions in the securities of their direct competitors and partner companies. Securities law experts said many of the trades, which in some instances rapidly delivered millions of dollars in profit, warranted examination by regulators. The transactions ranged across sectors: from energy to toys, paper products to mortgage servicers.

………

Among the notable examples:

The chairman of a biotech company bought shares in a corporate partner just as the partner was reaching the final stages of secret negotiations to be purchased.

The chairman of a bone health company made aggressive bets on a medical technology firm run by an adviser to his board just before its sales took off, netting him $29 million in a series of options trades.

A wealthy investor with ties to a niche area of cancer research personally traded, for the first time ever, in a company in that sector just before it was taken over. He bought high-risk options that earned him a quick $1 million in profit.

First, major props to Pro Publica for engaging in tedious shoe leather reporting.  Everyone else seems to be doing access journalism.

Second, this sort of behavior really needs to be made a priority for criminal investigations by federal law enforcement.

Putting these people in gaol (it's a jail, but more medieval) will create a deterrent to future wrongdoing.