Schering-Plough has issued a statement about heavy insider selling in 2007 of SGP stock by Fred Hassan's direct reports, including Carrie Smith Cox and before the result of a failed trial was announced which put SGP stock in a tailspin:
"the company has a rigorous process that executives follow before initiating any transaction in company securities, including pre-clearance with a securities lawyer; Carrie Cox followed these processes, as well as filing required SEC disclosures about the transactions on time. To date, the company has received no inquiry from a regulatory body relating to her trades. These trades go back to the spring of 2007, and the data for this trial were only unblinded approximately 2 weeks ago."
Let's reflect on this statement, but first point out that no one has been convicted of anything and the U.S. has a great tradition of presumed innocence until found guilty. It is, however a fact that Congress is investigating, according to CBS News, and according to other sources, which BrandweekNRX is not at liberty to discuss.
1. Pre-clearance of a securities lawyer is nice, but the lawyer only knows what he is told. If he is told that no non-public material information is available, then he'll presumably sign off on sale. If a group of executives have a hunch something is wrong with a pivotal trial for the same reasons cardiologists last year thought something was wrong, without seeing the data, and this hunch is based on non-public information and the lawyer doesn't know, he can't make an informed judgment.
2. Of course we expect that the company filed required SEC disclosures, as if that was something to be proud of . . . that's just as stupid as saying "I didn't break the speed limit driving the getaway car." Not that we are comparing Schering-Plough with a getaway car or the executives with bank robbers.
3. The sentence "the data for this trial were only unblinded approximately 2 weeks ago" is aimed to make us believe that before unblinding there could be no material non-public information. That is simply not so. If prominent cardiologists could figure out something was wrong last year and tell the media, surely corporate executives could come to the same conclusion at a much earlier time using internal non-public sources.
4. Oh, so you are saying you haven't been contacted, eh? Meaning we should think there's much ado about nothing? Should we expect that the first thing the government does is contact the target of an investigation and ask if he could please help incriminate himself? As if Schering-Plough wouldn't start yelling "attorney-client privilige" as soon as any investigator came by to talk to that "securities lawyer" who approved the sale? I'm just ROTFHWL.
Verdict: Schering-Plough is digging itself into a deeper and deeper hole by issuing nonsense statements.
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