rgelite,
Coincidentally, I read the latter of the two articles you cited just before writing my earlier post. (I wanted some background on the ImClone/Waksal case, did a Yahoo search for "ImClone Sam", and that article was at the top of the list.)
I agree that no one owes an honest answer to a potential axe murderer. The FDA may very well fit that description, from ImClone's point of view. Since it is impossible to market a drug within the US without FDA approval, the agency has absolute power over all pharmaceutical companies. And if that power is misused - whether from malice, ignorance, corruption, politics, or simple incompetence - there is no easy recourse.
However, the honesty I referred to was not honesty to the axe-wielding FDA, but honesty and fair dealing to the non-family investors of ImClone.
And to the rest of the investment community, for that matter - even the day-traders and short-sellers. You may not be funding ImClone's startup expenses by buying shares in the secondary market long after the IPO, but the IPO was only made possible by the existence and promise of that secondary market. Public equity markets are made possible by a large package of contractual agreements and by the force of law behind those contracts, and the insider trading regulations are part of that contractual package. The high valuation of ImClone's stock, and the liquidity which enabled the Waksals to sell their stock at a moment's notice, are benefits that public equity markets provide, but those benefits aren't free - you must agree to play by the rules when you decide to go public.
And unlike the situation with the FDA, no one is forced to go public to succeed. There is a substantial private equity market; one can build a very large and successful company without going public - look at how big Microsoft got long before their IPO. (Actually they are an unusual case as they were profitable and self-funded from the very beginning, and never had to raise any kind of venture capital. But I digress.)
The "mechanisms in the market in which all of us can detect when a corporate officer is buying/selling shares" - those filings are required by the rules which regulate insider trading, the same rules which I am defending here. Those rules were written to protect the "public", but insofar as they increase transparency and accountability they benefit everyone (including corporate founders) by increasing the public's willingness to participate in the market on a somewhat level playing field.
As to the morality of destroying one's values, I may be too idealistic on this one but I think that one's values should include a sense of personal responsibility to one's shareholders, and not just the ones that are close family or friends.
Now... if the FDA did screw Dr Samuel Waksal for reasons other than prudent science, then I wish he had pulled a Rearden defense in court. It very possibly would have worked, and it certainly would have put the FDA approval process up for a lot of scrutiny. I'm probably being too hard on him. I agree that creators and innovators have a very different focus than lawyers, and that he was looking out for his family, and undoubtedly not thinking clearly under pressure. He would have fared better if not for the post-bubble desire to see someone punished for wrongdoing, however minor; so would have Martha.
One thing I'm puzzled about: I was under the impression from the original news reports that Waksal had learned of the FDA decision the day before it was announced and had rushed to sell (and tipped off his family) - very much an "insider trading" situation. However, the "Witch Hunt" article you cited makes it sound quite a bit more innocent. Someone is putting spin on the story; I'm just not sure who it is.
Coincidentally, I read the latter of the two articles you cited just before writing my earlier post. (I wanted some background on the ImClone/Waksal case, did a Yahoo search for "ImClone Sam", and that article was at the top of the list.)
I agree that no one owes an honest answer to a potential axe murderer. The FDA may very well fit that description, from ImClone's point of view. Since it is impossible to market a drug within the US without FDA approval, the agency has absolute power over all pharmaceutical companies. And if that power is misused - whether from malice, ignorance, corruption, politics, or simple incompetence - there is no easy recourse.
However, the honesty I referred to was not honesty to the axe-wielding FDA, but honesty and fair dealing to the non-family investors of ImClone.
And to the rest of the investment community, for that matter - even the day-traders and short-sellers. You may not be funding ImClone's startup expenses by buying shares in the secondary market long after the IPO, but the IPO was only made possible by the existence and promise of that secondary market. Public equity markets are made possible by a large package of contractual agreements and by the force of law behind those contracts, and the insider trading regulations are part of that contractual package. The high valuation of ImClone's stock, and the liquidity which enabled the Waksals to sell their stock at a moment's notice, are benefits that public equity markets provide, but those benefits aren't free - you must agree to play by the rules when you decide to go public.
And unlike the situation with the FDA, no one is forced to go public to succeed. There is a substantial private equity market; one can build a very large and successful company without going public - look at how big Microsoft got long before their IPO. (Actually they are an unusual case as they were profitable and self-funded from the very beginning, and never had to raise any kind of venture capital. But I digress.)
The "mechanisms in the market in which all of us can detect when a corporate officer is buying/selling shares" - those filings are required by the rules which regulate insider trading, the same rules which I am defending here. Those rules were written to protect the "public", but insofar as they increase transparency and accountability they benefit everyone (including corporate founders) by increasing the public's willingness to participate in the market on a somewhat level playing field.
As to the morality of destroying one's values, I may be too idealistic on this one but I think that one's values should include a sense of personal responsibility to one's shareholders, and not just the ones that are close family or friends.
Now... if the FDA did screw Dr Samuel Waksal for reasons other than prudent science, then I wish he had pulled a Rearden defense in court. It very possibly would have worked, and it certainly would have put the FDA approval process up for a lot of scrutiny. I'm probably being too hard on him. I agree that creators and innovators have a very different focus than lawyers, and that he was looking out for his family, and undoubtedly not thinking clearly under pressure. He would have fared better if not for the post-bubble desire to see someone punished for wrongdoing, however minor; so would have Martha.
One thing I'm puzzled about: I was under the impression from the original news reports that Waksal had learned of the FDA decision the day before it was announced and had rushed to sell (and tipped off his family) - very much an "insider trading" situation. However, the "Witch Hunt" article you cited makes it sound quite a bit more innocent. Someone is putting spin on the story; I'm just not sure who it is.
Fortunately no children were found in the wreckage. [Aside: Turok may also have 3 legs. If that's the case, no need to assign me the soccer ball.]