Recently, we've seen Eliot Spitzer, and then Congress breathing down the necks of biotech and pharma companies regarding the disclosure (or lack of disclosure) of their clinical trial results, and now the SEC is getting into the act. While this is not the first the time SEC has looked into potentially nefarious wrongdoings at biotech/pharma companies (for example, ImClone), it sounds like the SEC is taking a particular interest now with whether public companies are disclosing any negative clinical trial results on a timely basis.
It looks like at least the SEC's Boston office is scrutinizing the disclosure forms for regional companies:
The SEC's Boston office has made the biotech industry a new focus because of the concentration of companies in the area and the possibility that selective disclosure could seriously harm investors, say lawyers and company officials.
"We won't comment on any particular matter," said Walter Ricciardi, district administrator of the SEC in Boston, "but speaking generally, we'd note that when companies speak, they must do so truthfully and accurately. Misrepresentations about the status of a product in development can be very damaging to investors."
It's not uncommon for one industry to suddenly be the whipping boy for the oversight agencies, and right now, the drug and device companies are easy prey with everyone worried about drug costs. It's irritating for many of the companies that are truly doing good, but it does have the upside of hopefully weeding out the snakeoil salesmen and making sure that there is great public faith and trust in the industry.
Moral of the story? Your trial results might not be quite what you'd hoped, but it's likely going to be far less painful to reveal them in your own way rather than wait for the SEC and FDA to crack down on you and disclose them in the most embarrassing way possible.
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