Last week, I told you about the common practice of selling drug research secrets to Wall Street investment firms. An interesting feature in today's New York Times reports, based on a recent Journal of the American Medical Association article, almost 10 percent of the nation's 700,000 doctors are paid to do consulting work for investment firms known as matchmakers that connect physicians and even drug company employees with investors for a fee.
Because many those physicians and employees – especially those working on ongoing clinical trials -- possess sensitive information that, if shared, could have undue influence on the stock market, the Securities and Exchange Commission (SEC) has stepped into the picture, and not a moment too soon...
Firms like Gerson Lehrman charge around $120,000 per business sector to subscribers (hedge or mutual fund executives) so they can keep their hands on the pulse of their industries via contact with experts in the field. Gerson Lerhman consultants sign contracts that forbid them to share proprietary details of the research they're working on.
Nevertheless, quite a few of them may have done it anyway. The sharing of confidential information has happened at least 26 times based on recent reports.
The only good news here is this "sharing" may also be viewed as an illegal breach of insider trading laws that may prompt investigations and prosecutions by the SEC. And, just the obvious potential for the appearance of impropriety has pushed some to give up their lucrative sidejobs too.
The Lakeland (Fla.) Ledger August 16, 2005
New York Times August 16, 2005 Registration Required