Allan Horwich

Insider Trading and Clinical Drug Trials

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For at least a quarter century, the Securities and Exchange Commission (SEC) has pursued claims of unlawful insider trading where the information at issue was material to the stock price of the sponsor of a clinical trial. In recent years, almost half of these cases were also prosecuted criminally, some resulting in prison sentences. Because the cases arise out of work in a medical academic setting, those charged may not have understood the broad reach of the law, including the misappropriation theory. Training and prophylactic measures may be deficient. The trading based on inside information about clinical trials is similar … Read more

The Legality of Opportunistically Timing Public Company Disclosures in the Context of SEC Rule 10b5-1

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Ever since the SEC adopted Rule 10b5-1in 2000 the rule has been the subject of controversy. Some have questioned its validity, others have claimed that it has been abused. The commentary that follows addresses one suspected abuse of Rule 10b5-1, whether persons who have created plans under Rule 10b5-1 and then time corporate disclosure to improve trading outcomes under those plans have violated the law.

The SEC’s position is that a trade made when an insider is in possession of material nonpublic information (MNPI) about the company is unlawful under the classical theory of insider trading. Rule 10b5-1 was designed … Read more