Biotech Values

[DewDiligence]

Further to the WSJ article
on option-grant timing
(from the DNDN ymb):

>>
Re: Option-grant timing
by: DewDiligence
03/19/06 03:15 pm
Msg: 183191 of 183195

>…as the article in the wall-street journal that Dew posted yesterday states, often insiders abuse the trust by granting themselves grants and cheap options when the stock is decimated. This IMO is much worse than them buying shares in the open market if they are privy to insider info, don't you think? So, since Gold and management received all these grants last month, I would assume they could have easily just as well bought shares in the open market at the same time. You cannot have it both ways claiming insider priviliges for not buying shares in the open market and then also granting yourself cheap options and free grants knowing that exact material info!<

Actually, the SEC does make such a distinction. The basis for the distinction is that is that option grants are transactions between the company and the insiders—there is no third party involved. Open-market purchases, on the other hand, have an innocent party on the other side of the transaction (i.e. the seller, if the buyer is an insider), who the SEC seeks to protect. If an insider is buying on the open market based on material non-public information, then the SEC’s contention is that the seller of these shares is being defrauded.

I agree that there ought to be strict rules about when options can be granted (or when they can be exercised); however, under current SEC rules, companies are allowed to do almost anything they want in the timing of option grants (provided that they are not backdated as in the WSJ article). Regards, Dew

[Posted as a reply to: Msg 183167 by croumagnon]
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