-----BEGIN PGP SIGNED MESSAGE----- Hash: SHA1 This *this* boys and girls, is *exactly* why "insider" trading laws are just so much statist happy horseshit. As we see below, one woman's trash is another man's treasure, and *nobody* knows which is which, no matter *how* much "inside" information they have. As in anything else, *nobody* can calculate the future value of information, "inside" or otherwise. The value of *anything* can *only* be *discovered* in a free market, and not calculated, in mind or machine, much less legislated by vote, fiat, or anything in between. Even in the worst cases, so-called "insiders" know just as much as you or I do about the future value of any stock, including that of their own companies: exactly nothing. "Insider" trading regulation wasn't even *promulgated* until the early 1960's, at the height of government hubris about it's ability to "regulate" everything. Something that has been shown, from the price of gold, to the price of gas, to the availability of airline seats, to be evil, if not stupid. In the case of "insider" trading, just because you have information about shareholder positions in almost realtime, like they were able to do with the advent of computer-based book-entry settlement and manditory registration of equity positions, doesn't mean that you have an obligation to control it. If somebody took an axe to all government "regulation" of the economy, particularly from about the passage of the 16th amendment -- about 1916 or so -- we would be enormously better off. Not that it'll ever happen of course, but I feel like venting this morning... Cheers, RAH - ------- <http://online.wsj.com/article_print/0,,SB108318701386996379,00.html> The Wall Street Journal April 29, 2004 HEARD ON THE STREET For Icahn, ImClone Purchase Was a Good Thing Investor Faces $250 Million Profit From Bet Made as Stewart Sold; Time to Take the Money and Run? By SUSAN PULLIAM Staff Reporter of THE WALL STREET JOURNAL April 29, 2004; Page C1 Talk about zigging when others zagged. By now, everyone knows how Martha Stewart was alerted by a Merrill Lynch & Co. brokerage assistant that Sam Waksal, her friend and founder of ImClone Systems, was trying to sell the biotech company's shares. Less well known, however, is the story of how financier Carl Icahn was buying ImClone shares that very day, possibly even snapping up the same shares that Ms. Stewart was unloading. Mr. Icahn recently disclosed in a filing with the Securities and Exchange Commission that he owns 5.24 million shares of ImClone, a stake he first began accumulating with a purchase of 10,000 shares on Dec. 27, 2001, people close to the situation say. After his purchase on Dec. 27, Mr. Icahn stopped buying ImClone for a few months. As the scandal unfolded and the share price fell to below $10 in the summer of 2002, Mr. Icahn began buying ImClone shares again, adding 3.6 million shares to his holdings. He bought the stock again earlier this year, picking up 1.63 million shares. That purchase brought his average purchase price to $19.58, according to the SEC filing. His profit, with ImClone shares now at $70 each, the level where they were before the scandal hit would be a cool $250 million. So much for the value of a tip from a broker. Ms. Stewart was recently convicted on criminal charges of lying to prosecutors about the facts surrounding her sale of ImClone stock, which she sold at about $58. Her lawyers have asked for a new trial on the grounds that one of the jurors lied on his courtroom questionnaire. Mr. Waksal, meanwhile, is serving a seven-year jail sentence after pleading guilty to insider-trading charges. But Mr. Icahn, who is famous for his contrarian bets, went the opposite direction of the ImClone inner circle, believing that the drop in the stock represented a chance to pick up a bargain, say people close to the situation. Mark Weitzen, Mr. Icahn's lawyer, declined to comment. BUYING OPPORTUNITY While Martha Stewart was unloading her ImClone shares, Carl Icahn starting to build up his stake. See how ImClone's stock0 has performed since 2001. ImClone shares began falling in December 2001, from $75 on Dec. 6 to $46.46 on Dec. 28, when ImClone announced that the Food and Drug Administration had refused to review its application to market Erbitux, ImClone's promising new cancer drug. The stock continued to plunge to a low of around $6 in the summer of 2002, after news surfaced that Mr. Waksal had tipped off his family about the development, triggering an investigation. Around the same time, prosecutors launched an investigation of Ms. Stewart's sale of ImClone stock. It turns out Mr. Icahn's instincts were right. This February, the FDA finally approved Erbitux for use against colon cancer. On Tuesday, ImClone reported a big jump in earnings on the strength of Erbitux and a licensing payment by Bristol-Myers Squibb Co. connected to the approval of the drug. Earnings for the New York biotechnology company totaled $62.7 million, compared with a loss of $34.8 million a year earlier. In 4 p.m. trading yesterday on the Nasdaq Stock Market, ImClone shares fell 63 cents to $69.31. The question now is how long Mr. Icahn will hang on to his ImClone shares. If history is any guide, he could be thinking of taking some money off the table. That is because Mr. Icahn's latest gain in ImClone stock follows a nearly identical profit of $250 million on an investment in ImClone in December 2000, when Mr. Icahn disclosed in an SEC filing that a group, including himself, owned more than six million shares of ImClone. Mr. Icahn's group sold those shares in mid-2001 at around $70 each. That was a few months before Bristol-Myers bought a big stake in ImClone. Mr. Icahn's sale back then preceded a big drop in ImClone's shares to below $40. People close to the situation say the financier joked at the time with Mr. Waksal that he was selling the shares because it was his rule of thumb to sell when an investment gain totals "a quarter of a billion dollars." It isn't clear whether Mr. Icahn applies that rule the second time around. -----BEGIN PGP SIGNATURE----- Version: PGP 8.0.3 iQA/AwUBQJERh8PxH8jf3ohaEQKYjQCgrqJyIgYG7vogBKd5fnRVAp5OYKIAoIOV PadwJRMUlQ6yhC+TMeC2QIll =g7cW -----END PGP SIGNATURE----- -- ----------------- R. A. Hettinga <mailto: rah@ibuc.com> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'