by esseti on 11/11/20, 7:49 AM with 84 comments
by ageitgey on 11/11/20, 11:18 AM
It is 'not illegal' to time an announcement to benefit yourself if you have a 10b5-1 plan in place that automatically sells your stock on a fixed schedule. It's 'not illegal' in the sense that as long as you don't admit you did it, there's really no way to prove it and there's no legal framework for prosecuting you anyway. Lawyers call it 'disclosure timing' and it's one of those often-whispered-about loopholes for the rich.
No one admits to disclosure timing, but we all know that it is happening. We know this because on average trades made under 10b5-1 plans get better returns than trades not made under those plans. [1]
The law is full of ways for rich people to get richer if they have good lawyers. This is one of them. There's not much incentive to change it either - it is hard to prove, it is complex to explain to the public, and the kinds of people that benefit from it are the kinds of people in power.
One of the suggested routes to make the market more fair is to require those with 10b5-1 plans to make their scheduled trade dates public. This would at least give the market at way to guess at disclosure timing too. But again, there's no real political incentive to do this right now.
[1] https://clsbluesky.law.columbia.edu/2016/03/30/the-legality-...
NB: I'm not a lawyer, so obviously don't do anything based on this dumb internet comment.
by throw03172019 on 11/11/20, 8:19 AM
Then why is this news.
by lacker on 11/11/20, 8:17 AM
Also, the article mentions it was a 10b5-1 plan. Typically that means he is precommitted to sell stock on a predetermined schedule, and had no choice but to continue selling this stock on this day as planned.
by MAGZine on 11/11/20, 8:28 AM
by danielrpa on 11/11/20, 11:00 AM
I find hard to believe he would risk an insider trading lawsuit over this amount, so my conclusion is that this was simply a prescheduled transaction. Have in mind that the increase will stick around for some time (stock still up ~8% since last week) so he would have benefitted anyway selling many days afterwards, or even weeks.
by IdontRememberIt on 11/11/20, 6:34 PM
by situationista on 11/11/20, 9:28 AM
by sirspacey on 11/12/20, 9:47 PM
Anything else effectively makes them a lower-class shareholder.
Pfizer is a huge, multi-billion dollar business. The CEO making $5M off a stock sale is relatively minuscule, especially after delivering such a massive win for shareholders.
by hibbelig on 11/11/20, 12:44 PM
by nobrains on 11/11/20, 9:43 AM
by abtom on 11/11/20, 8:48 AM
Corona Daily 271: Pfizer Vaccine – Celebrate with Caution
In an earlier chapter on the vaccine race, I wrote: God forbid Pfizer wins the race. God answered my fears. Yesterday, Pfizer announced with aplomb a 90% effective vaccine. Editors changed headlines, stock markets vaulted, people made new Christmas plans, respectable newspapers foresaw the end of the pandemic.
The Pfizer vaccine needs to be stored at -80 C (-112 F) all the time. The ultracold logistics rule out most of Asia and Africa. In the best case, it is accessible to 2.5 billion people in 25 countries, mainly North America and Europe. Dr Fauci called the results extraordinary, at the same time admitting he hadn’t seen the data yet. May the vaccine truly have extraordinary success, and spell the end of the pandemic. * When such joyous news is announced, it is in bad taste to criticize or express concerns. The critic will be termed a spoilsport, a pessimist, a conspiracy theorist, or antivaxx activist. I am none of these. I am, however, puzzled by the way Pfizer has gone about the process. I would like to voice these concerns so as to tone down the hype, if it is hype. As I wrote earlier, in the trials, the company must reach pre-agreed numbers of Covid-19 cases, in the vaccine and the placebo groups. Since the beginning, Pfizer has been aggressively demanding more interim points, and fewer cases. Their minimum point for seeking authorization was 32. (32 patients among 30000 participants). Anybody who has studied statistics would know the number doesn’t look significant. In fact, scientists not working for Pfizer raised this concern. This was summer time, and the curve was going down. The Pfizer scientists were worried about the time it may take to reach a higher figure. But they amended protocol to look at the data at 62 cases. Not only the numbers, Pfizer’s plan allowed the mildest cases to be counted. Most other trials including Johnson & Johnson and Oxford, even the Chinese vaccine trial currently, were paused because of adverse events. This is when a participant develops a condition that may have been caused by the vaccine. The trial remains paused until the condition is investigated. Pfizer enlarged its sample size to 44,000 but didn’t face a single adverse event, which must be attributed to its luck. On 26 October, Albert Bourla, Pfizer’s CEO said they didn’t have 32 covid cases yet. The interim data, when available, is reviewed by an independent board. Pfizer was once again lucky, the cases surged dramatically. On Sunday, 8 November, the independent board came, reviewed the data of 94 cases, and let the company management know the conclusion without sharing data. * The trial is not over. It will be over once Pfizer reaches 164 cases. The right thing was to wait till the end of the trials, and then publish the data in a medical journal for peers to review. Once it is peer-reviewed, the results can be published worldwide. Instead of that, Pfizer opted to release unpublished, unreviewed half-baked data as news. Not only that, the news was released consciously early on Monday morning before the US stock markets open. Stock markets are like dogs who will drool and jump at the sight of a dummy bone. When the markets opened, Pfizer shares leaped by 15%, its partner BioNTech’s by 24%, and the major indexes reached new records. Such outright corruption was glossed over in the euphoria of the 90% effective vaccine. FDA now has stricter standards after botching hydroxychloroquine and plasma episodes. Scott Gottlieb, the previous FDA commissioner, is now on Pfizer’s board. That may help in the approval process. * Though times are exceptional, and any vaccine may be better than no vaccine, knowledge of Pfizer’s maneuvers dilutes the joy of their 90% effective news. Ravi
by nikolay on 11/11/20, 9:05 AM
by PJDK on 11/11/20, 9:26 AM
My understanding of the "wrongness" of insider trading is using privileged information to make profit and thus "stealing" from other investors - at least that's what I've picked up from Matt Levine.
In this case he's trading on very public information. Anyone who has held Pfizer stock for a while must have at least considered if this news was the moment to cash some of it in.
When he made the decision to sell he'd have known the trial results would have been coming in, but couldn't have known what they'd be. If they'd just come back with a "no go" the stock would have tanked. If anything it seems like an unfair disadvantage, every other long term investor in Pfizer can decide on the day of the announcement what to do, the CEO has to bet months in advance.
by 0x008 on 11/11/20, 8:16 AM