Spectrum Pharmaceutecals Inc (SPPI)

[JavaPunk]

Regarding Raj Form 4

Ville - you are mostly right.

Raj exercised stock options and paid the exercise price to the Company. (the "M" Code on the Form 4 means "option exercise" )

When a person exercises stock options he has ordinary income and must pay taxes on the built in profit (the stock price minus the exercise price = profit)

Raj could have paid the taxes by selling shares on the open market, paying cash from his bank account or having SPPI withhold / cancel the number of shares that equal the tax payment. Raj's Form 4 shows that SPPI chose to withhold (the "F" Code on the Form 4) enough shares to pay the taxes (these shares are not technically cancelled but rather are never issued so there is NO dilution on resulting from these shares.

Raj likely waited to exercise his options until after Jan 1st so he would only pay 37% fed tax rate from the new Tax law change rather than the 39.6% he would have paid if he exercised before Jan 1st.

Raj will now start his capital gains holding period on all shares acquired

This is a net net positive strategy and should not be viewed as negative. This is a BULLISH strategy by both Raj and SPPI