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Re: ACTX post# 21675

Thursday, 11/04/2004 11:46:06 AM

Thursday, November 04, 2004 11:46:06 AM

Post# of 45574
ACTX...The Why's To Dr.D.'s Post.

I'm heading out soon, but had a couple of hours this morning to research the subject of his post. In studying and following the market for 20 years it is clear to me how fluid the interpretation of insider information and trading is, even though the law is crystal clear.

This morning I've reviewed archived speeches from the SEC, past case law, comments (more like novels) from Wharton and Harvard, as well as studied interaction by the SEC in markets in Turkey, New Zealand and a couple in Europe in trying to gage the issue in terms of CMKX.

Personally I contend outside of PR's, the interviews, both on-line or elsewhere, with key executives (UC, RW, RG & geologists) remain the most effective way to stay in compliance with statutory and case law outlined by the SEC and the courts, outside of pr's. These interviews are important because they are able to focus in on the issues in recent pr's as well as confirm or dispell and rumors at the time. The interviews provide a great way for the company to 'connect the dots' and 'cross some T's' that people have questions to, whether it be in regard to updates on drilling, results expectations, status on becoming reporting. These periodic answers and update are key components for such a large shareholder base, and in doing so in an interview format, remain in compliance with the law.

Call me crazy, but answering questions on their dedicated website seemed like a fine system to me. Some may wish a different person appointed for addressing such questions than was previously doing it this spring and early summer. The main point is in doing so I felt was a fine way to convey interim information publically. It's not as good or as fluent as maybe an interview would be. But it was adequate and most important, compliant with the law.

Here is the best link I could find to bring to the board which best describes an outline of the law and seriousness of the matter in the clearest form. Some of what I read through this morning was great reading, but dry as it gets..lol. This gets to the heart of the matter:

http://management.about.com/cs/businessethics/a/InsiderTrade702.htm

Read the whole piece, but what follows is what I felt spoke directly to the issue at hand with regard to CMKX and us as shareholders. Quoting from the article:

"So does that mean you are not an insider unless you are on the company's management team, financial or development teams, or someone hired to handle the material information? In a word, "No".

The SEC includes in its definition of insiders those who have "temporary" or "constructive" access to the material information. If the President of a company tells you that the company's best hope for a breakthrough product isn't going to get regulatory approval, you are now every bit as much an insider as he is, with respect to that information. It is illegal for him to trade based on that knowledge before it becomes public knowledge. It is equally illegal for you to do so because you are now a "temporary insider". This remains true regardless of how many times the information is passed. If the president tells his barber, who tells her baby sitter, who tells her doctor, who tells you, the barber, baby sitter, doctor and you are all "temporary insiders".

Anyone who has material information is prohibited from trading, based on that knowledge, until the information is available to the general public. The US Supreme Court ruled recently, that this even applies to someone with no ties to the company. Possession of material information makes you an insider, even if you stole the information.

Significant Penalties
Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 give the SEC the authority to seek a court order requiring violators to give back their trading profits. The SEC can also ask the court to impose a penalty of up to three times the profit the violators realized from their insider trading.

In addition to the financial penalties, there are criminal penalties. Many now feel those penalties are not strong enough and are working to increase them substantially. A bill in the US Senate, for instance, seeks to make defrauding shareholders a felony punishable by up to 10 years in prison."

Be well,

Bo







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