Replies to post #175209 on Biotech Values

[DewDiligence]

The granting of stock options while insiders have (bullish) material non-public information was discussed on a recent thread here with respect to CYTR (#msg-94971832). While this practice is not strictly illegal, it is unethical. (CYTR argued—lamely, IMO—that the option grants were not unethical because they were awarded on the same date in the prior year.)

In any case, I certainly wouldn’t infer that NVAX bullish news is imminent just because insiders were awarded stock otpions.

[biomaven0]

Granting options while the company is in the possession of material positive information is called spring-loading.

The SEC doesn't prohibit it, but some courts have held that it could be a deceptive practice:

The Delaware Court of Chancery Speaks on Option Backdating and Spring-Loading

http://www.gelaw.com/wp-content/uploads/2011/05/ART_016A_de_court_speaks.pdf

Best practice is to award stock options on pre-determined dates (whether annually or quarterly).

Peter