8 ms·

Pfizer's CEO sold $5.6M in stock on same day of vaccine news

113 points by esseti 6y ago

hibbelig 6y ago
Maybe I'm misunderstanding the article, but my reading is that the stock went up after the sale. So the CEO left money on the table.
0x008 6y ago
Probably the biggest break Pfizer will get in the next decade. Why is this on hackernews? That shouldn't be surprising to anyone, but rather a pretty normal thing to do if you have stocks: selling high.
- baal80spam 6y ago
  True - perfect example of buy the rumour, sell the news.
- choeger 6y ago
  In principle the CEO could have post-/preponed the press announcement knowing that his sale is due. I don't know if that alone makes the sale legally dubious, but there are some ethical considerations here. If he postponed the press release, could it be that he expects the markets to overreact, i.e., are the actual findings not as good as the release makes them sound? If he preponed the release, did he potentially release unsound information to improve his own valuation? It would be better for him if he could prove that there was no involvement from his side into the schedule.
lacker 6y ago
If he really wanted to profit in the stock market, he could have bought call options for the cruise lines, or put options on Zoom, both of which jumped more than Pfizer stock did. And if I understand correctly, that wouldn't have been insider trading, that would have been perfectly legal? Also, the article mentions it was a 10b5-1 plan. Typically that means he is precommitted to sell stock on a predetermined schedule, and had no choice but to continue selling this stock on this day as planned.
- jbverschoor 6y ago
  And who decides on the announcement date of such a big reveal?
  - thaumasiotes 6y ago
    In this case, it was the FDA, who delayed the announcement (and the study itself) until well after it had met the data thresholds it was preregistered to use. https://www.statnews.com/2020/11/09/covid-19-vaccine-from-pfizer-and-biontech-is-strongly-effective-early-data-from-large-trial-indicate/ https://www.statnews.com/2020/11/09/covid-19-vaccine-from-pf...
- rapsey 6y ago
  > If he really wanted to profit in the stock market, he could have bought call options for the cruise lines, or put options on Zoom, both of which jumped more than Pfizer stock did. And if I understand correctly, that wouldn't have been insider trading, that would have been perfectly legal? Oh how easy. All he should have known in advance is that cruise lines and zoom stocks will move more than Pfizer. So strange that he decided not to do that when it is so obvious before the event.
  - distant_hat 6y ago
    Its not that they would move more or less, it is that they would move a large amount. And would not trigger a news item like this.
    - deleted 6y ago
      [deleted]
  - MattGaiser 6y ago
    That's not hard to know. Any of them would move more than Pfizer. They have been swinging around since the pandemic arrived. All the cruise lines soared the last time talk of a vaccine happened as well, while Zoom fell.
throw03172019 6y ago
“The stock sale is perfectly legal through a predetermined plan called Rule 10b5-1” Then why is this news.
- jbverschoor 6y ago
  Many things are (still) legal. This is how regulations form.. Maybe there should be a new regulation: No major announcements may be made which directly impacts stock price X% before X months of the predetermined sales date.
  - tomas789 6y ago
    There are rules like that. For example executives cannot buy/sell stocks of their companies around the major announcements like financial results. Most of the time internal compliance department just sets a windows in which it is safe to do such transactions. As for the announcements one usually has to announce before the transaction is made (again compliance reasons) but then you don’t want to wait because the price tends to move against you with such announcements. This is why the real trades were likely executed just seconds after the announcement.
  - kortilla 6y ago
    There is no way to know what percentage an announcement will move a stock. Additionally, given that executives schedule stock sales all year long (most of their comp is stock), that effectively means no announcements can ever be made.
  - codetrotter 6y ago
    But in that case, should Pfizer wait an additional x amount of days before they announce the vaccine just because the CEO had a sell order planned? That wouldn’t be great for the world either I think. Or how did you mean?
    - devdas 6y ago
      Execute the sale, then make the announcement.
MAGZine 6y ago
The sale date is predetermined but press release dates are not.
- jbverschoor 6y ago
  Exactly
- MR4D 6y ago
  Not true - the sale can be triggered by a predetermined price as well.
- ilkkao 6y ago
  This can easily be a monthly plan that runs several years. In that case doesn't make a big difference in his long term income.
  - aquadrop 6y ago
    Article says plan was created in August. Also I wonder according to the rules, with predetermined date, do you need to sell right at the opening or can choose time within day? Because it says "same day" but it's not clear was it before or after announcement.
- mxcrossb 6y ago
  I’m imagining now a Senate hearing where republican members admonish Pfizer for not announcing this information before the election to help their candidates, only for the CEO to drop the ultimate defense of “I timed it to make more money”
abtom 6y ago
This is big because it seems they have announced the results hurriedly before the trial concluded. Copy pasting a blog entry from https://raviopendiary.blogspot.com/2020/11/corona-daily-271-pfizer-vaccine.html?m=1 https://raviopendiary.blogspot.com/2020/11/corona-daily-271-... Corona Daily 271: Pfizer Vaccine – Celebrate with Caution In an earlier chapter on the vaccine race, I wrote: God forbid Pfizer wins the race. God answered my fears. Yesterday, Pfizer announced with aplomb a 90% effective vaccine. Editors changed headlines, stock markets vaulted, people made new Christmas plans, respectable newspapers foresaw the end of the pandemic. The Pfizer vaccine needs to be stored at -80 C (-112 F) all the time. The ultracold logistics rule out most of Asia and Africa. In the best case, it is accessible to 2.5 billion people in 25 countries, mainly North America and Europe. Dr Fauci called the results extraordinary, at the same time admitting he hadn’t seen the data yet. May the vaccine truly have extraordinary success, and spell the end of the pandemic. * When such joyous news is announced, it is in bad taste to criticize or express concerns. The critic will be termed a spoilsport, a pessimist, a conspiracy theorist, or antivaxx activist. I am none of these. I am, however, puzzled by the way Pfizer has gone about the process. I would like to voice these concerns so as to tone down the hype, if it is hype. As I wrote earlier, in the trials, the company must reach pre-agreed numbers of Covid-19 cases, in the vaccine and the placebo groups. Since the beginning, Pfizer has been aggressively demanding more interim points, and fewer cases. Their minimum point for seeking authorization was 32. (32 patients among 30000 participants). Anybody who has studied statistics would know the number doesn’t look significant. In fact, scientists not working for Pfizer raised this concern. This was summer time, and the curve was going down. The Pfizer scientists were worried about the time it may take to reach a higher figure. But they amended protocol to look at the data at 62 cases. Not only the numbers, Pfizer’s plan allowed the mildest cases to be counted. Most other trials including Johnson & Johnson and Oxford, even the Chinese vaccine trial currently, were paused because of adverse events. This is when a participant develops a condition that may have been caused by the vaccine. The trial remains paused until the condition is investigated. Pfizer enlarged its sample size to 44,000 but didn’t face a single adverse event, which must be attributed to its luck. On 26 October, Albert Bourla, Pfizer’s CEO said they didn’t have 32 covid cases yet. The interim data, when available, is reviewed by an independent board. Pfizer was once again lucky, the cases surged dramatically. On Sunday, 8 November, the independent board came, reviewed the data of 94 cases, and let the company management know the conclusion without sharing data. * The trial is not over. It will be over once Pfizer reaches 164 cases. The right thing was to wait till the end of the trials, and then publish the data in a medical journal for peers to review. Once it is peer-reviewed, the results can be published worldwide. Instead of that, Pfizer opted to release unpublished, unreviewed half-baked data as news. Not only that, the news was released consciously early on Monday morning before the US stock markets open. Stock markets are like dogs who will drool and jump at the sight of a dummy bone. When the markets opened, Pfizer shares leaped by 15%, its partner BioNTech’s by 24%, and the major indexes reached new records. Such outright corruption was glossed over in the euphoria of the 90% effective vaccine. FDA now has stricter standards after botching hydroxychloroquine and plasma episodes. Scott Gottlieb, the previous FDA commissioner, is now on Pfizer’s board. That may help in the approval process. * Though times are exceptional, and any vaccine may be better than no vaccine, knowledge of Pfizer’s maneuvers dilutes the joy of their 90% effective news. Ravi
nikolay 6y ago
I just heard that the vaccine is impractical is it needs -70C for storage.
- genidoi 6y ago
  The pandemic is orders of magnitude more impractical than a end-to-end -70C logistics chain.
- thelastname 6y ago
  That's a fake news. It's -80C.
  - bajsejohannes 6y ago
    A slightly wrong number is not "fake news".
    - mxcrossb 6y ago
      He was being sarcastic
  - _Microft 6y ago
    So "fake news" is what we say for "wrong" nowadays? I am getting old as it seems. Pfizer expects the vaccine to be good for up to one week at -8°C to +2°C, so the difference in stability or storage life at -70°C or -80°C might be a small issue compared to what difference it makes on the requirements on the continuous cold chain. It sounds like using dry ice might be a 90/10 solution, as Michael Seibel would call it: get 90% of the result with 10% of the effort.
PJDK 6y ago
Am I missing something as to why anyone finds this outrageous? My understanding of the "wrongness" of insider trading is using privileged information to make profit and thus "stealing" from other investors - at least that's what I've picked up from Matt Levine. In this case he's trading on very public information. Anyone who has held Pfizer stock for a while must have at least considered if this news was the moment to cash some of it in. When he made the decision to sell he'd have known the trial results would have been coming in, but couldn't have known what they'd be. If they'd just come back with a "no go" the stock would have tanked. If anything it seems like an unfair disadvantage, every other long term investor in Pfizer can decide on the day of the announcement what to do, the CEO has to bet months in advance.
- caymanjim 6y ago
  It's highly unusual to announce such early results of a trial. I don't know if it's illegal, but it sure smells funny.
  - deleted 6y ago
    [deleted]
  - refurb 6y ago
    This interim analysis was made in agreement with the FDA. Interim analyses are released all the time.
- Leherenn 6y ago
  I don't know if it is outrageous, but I can see why it might sound shifty. He probably didn't know the results when he made the decision to make the trade, but he might have decided the date of the announcement based on his trade date. The question here is: is "Let's make the announcement on Wednesday. Wait, I have a trade scheduled on Tuesday, so let's move it to Tuesday because I expect an overreaction from the market." illegal or unethical? Or maybe he had no influence on the date and got lucky.
- Traster 6y ago
  It's quite simple, these trial results don't just get automatically published. He knows he has a sale date coming up, if the results are good, he times the announcement just before his sale - causing a pop to his stock (that likely will mean revert eventually) causing the peak share price to occur around the time he sells. If the results are bad he delays the announcement to the day after his sale, making sure he secures a good price before the inevitable drop. The CEO of Pfizer shouldn't be timing market moving evens based on his personal stock trading.
situationista 6y ago
For the CEO of a company like Pfizer I'd imagine that this amounts to little more than one month's salary.
- refurb 6y ago
  More like 3-4 months salary. He made $18M last year. https://www.fiercepharma.com/pharma/pfizer-new-boss-bourla-nets-17-9m-2019-pay-as-drugmaker-beat-all-financial-targets https://www.fiercepharma.com/pharma/pfizer-new-boss-bourla-n...
nobrains 6y ago
Please help me understand. Wouldn't it be insider trading if anyone knowing the vaccine news, would BUY Pfizer shares just before the news, and not SELL just after the news?
danielrpa 6y ago
The stock went up 8% on the day of the announcement, giving him a gain of under 400K pretax. This is a lot of money for mere mortals like us, but small potatoes for the CEO of a major multinational company. I find hard to believe he would risk an insider trading lawsuit over this amount, so my conclusion is that this was simply a prescheduled transaction. Have in mind that the increase will stick around for some time (stock still up ~8% since last week) so he would have benefitted anyway selling many days afterwards, or even weeks.
- boublepop 6y ago
  Assuming he pushed for the announcement to coincide with the preplanned sale he had absolutely no way of knowing how much the stock would potentially jump up. If a bank robber only manages to get away with 100 dollars because the register is low, you wouldn’t come out defending him saying “well the claim is he only stole 100$, and obviously no one would care about such a small amount, so we can conclude that he didn’t actually try to rob the bank”.
ageitgey 6y ago
Here's the deal, since this issue comes up regularly in Hacker News comments: It is 'not illegal' to time an announcement to benefit yourself if you have a 10b5-1 plan in place that automatically sells your stock on a fixed schedule. It's 'not illegal' in the sense that as long as you don't admit you did it, there's really no way to prove it and there's no legal framework for prosecuting you anyway. Lawyers call it 'disclosure timing' and it's one of those often-whispered-about loopholes for the rich. No one admits to disclosure timing, but we all know that it is happening. We know this because on average trades made under 10b5-1 plans get better returns than trades not made under those plans. [1] The law is full of ways for rich people to get richer if they have good lawyers. This is one of them. There's not much incentive to change it either - it is hard to prove, it is complex to explain to the public, and the kinds of people that benefit from it are the kinds of people in power. One of the suggested routes to make the market more fair is to require those with 10b5-1 plans to make their scheduled trade dates public. This would at least give the market at way to guess at disclosure timing too. But again, there's no real political incentive to do this right now. [1] https://clsbluesky.law.columbia.edu/2016/03/30/the-legality-of-opportunistically-timing-public-company-disclosures-in-the-context-of-sec-rule-10b5-1/ https://clsbluesky.law.columbia.edu/2016/03/30/the-legality-... NB: I'm not a lawyer, so obviously don't do anything based on this dumb internet comment.
- aquadrop 6y ago
  I didn't find statistics about 10b5-1 trades being more profitable in the source, only idea that it should be so. Is there another source?
IdontRememberIt 6y ago
Many other stocks made +30% in one day. For sure, some pfiser employees could have played with "calls" on other companies through proxies and made a lot of money. For exemple, if one has family in an other country, he could have instruct them to buy airbus calls. It is very difficult to detect that.
sirspacey 6y ago
I am 100% ok with a CEO cashing out on top of a success. Anything else effectively makes them a lower-class shareholder. Pfizer is a huge, multi-billion dollar business. The CEO making $5M off a stock sale is relatively minuscule, especially after delivering such a massive win for shareholders.

113 points by esseti 6y ago

Maybe I'm misunderstanding the article, but my reading is that the stock went up after the sale. So the CEO left money on the table.

0x008 6y ago

Probably the biggest break Pfizer will get in the next decade. Why is this on hackernews? That shouldn't be surprising to anyone, but rather a pretty normal thing to do if you have stocks: selling high.

baal80spam 6y ago
True - perfect example of buy the rumour, sell the news.
choeger 6y ago
In principle the CEO could have post-/preponed the press announcement knowing that his sale is due. I don't know if that alone makes the sale legally dubious, but there are some ethical considerations here. If he postponed the press release, could it be that he expects the markets to overreact, i.e., are the actual findings not as good as the release makes them sound? If he preponed the release, did he potentially release unsound information to improve his own valuation? It would be better for him if he could prove that there was no involvement from his side into the schedule.

lacker 6y ago

If he really wanted to profit in the stock market, he could have bought call options for the cruise lines, or put options on Zoom, both of which jumped more than Pfizer stock did. And if I understand correctly, that wouldn't have been insider trading, that would have been perfectly legal? Also, the article mentions it was a 10b5-1 plan. Typically that means he is precommitted to sell stock on a predetermined schedule, and had no choice but to continue selling this stock on this day as planned.

jbverschoor 6y ago
And who decides on the announcement date of such a big reveal?
- thaumasiotes 6y ago
  In this case, it was the FDA, who delayed the announcement (and the study itself) until well after it had met the data thresholds it was preregistered to use. https://www.statnews.com/2020/11/09/covid-19-vaccine-from-pfizer-and-biontech-is-strongly-effective-early-data-from-large-trial-indicate/ https://www.statnews.com/2020/11/09/covid-19-vaccine-from-pf...
rapsey 6y ago
> If he really wanted to profit in the stock market, he could have bought call options for the cruise lines, or put options on Zoom, both of which jumped more than Pfizer stock did. And if I understand correctly, that wouldn't have been insider trading, that would have been perfectly legal? Oh how easy. All he should have known in advance is that cruise lines and zoom stocks will move more than Pfizer. So strange that he decided not to do that when it is so obvious before the event.
- distant_hat 6y ago
  Its not that they would move more or less, it is that they would move a large amount. And would not trigger a news item like this.
  - deleted 6y ago
    [deleted]
- MattGaiser 6y ago
  That's not hard to know. Any of them would move more than Pfizer. They have been swinging around since the pandemic arrived. All the cruise lines soared the last time talk of a vaccine happened as well, while Zoom fell.

throw03172019 6y ago

“The stock sale is perfectly legal through a predetermined plan called Rule 10b5-1” Then why is this news.

jbverschoor 6y ago
Many things are (still) legal. This is how regulations form.. Maybe there should be a new regulation: No major announcements may be made which directly impacts stock price X% before X months of the predetermined sales date.
- tomas789 6y ago
  There are rules like that. For example executives cannot buy/sell stocks of their companies around the major announcements like financial results. Most of the time internal compliance department just sets a windows in which it is safe to do such transactions. As for the announcements one usually has to announce before the transaction is made (again compliance reasons) but then you don’t want to wait because the price tends to move against you with such announcements. This is why the real trades were likely executed just seconds after the announcement.
- kortilla 6y ago
  There is no way to know what percentage an announcement will move a stock. Additionally, given that executives schedule stock sales all year long (most of their comp is stock), that effectively means no announcements can ever be made.
- codetrotter 6y ago
  But in that case, should Pfizer wait an additional x amount of days before they announce the vaccine just because the CEO had a sell order planned? That wouldn’t be great for the world either I think. Or how did you mean?
  - devdas 6y ago
    Execute the sale, then make the announcement.

MAGZine 6y ago

The sale date is predetermined but press release dates are not.

jbverschoor 6y ago
Exactly
MR4D 6y ago
Not true - the sale can be triggered by a predetermined price as well.
ilkkao 6y ago
This can easily be a monthly plan that runs several years. In that case doesn't make a big difference in his long term income.
- aquadrop 6y ago
  Article says plan was created in August. Also I wonder according to the rules, with predetermined date, do you need to sell right at the opening or can choose time within day? Because it says "same day" but it's not clear was it before or after announcement.
mxcrossb 6y ago
I’m imagining now a Senate hearing where republican members admonish Pfizer for not announcing this information before the election to help their candidates, only for the CEO to drop the ultimate defense of “I timed it to make more money”

abtom 6y ago

This is big because it seems they have announced the results hurriedly before the trial concluded. Copy pasting a blog entry from https://raviopendiary.blogspot.com/2020/11/corona-daily-271-pfizer-vaccine.html?m=1 https://raviopendiary.blogspot.com/2020/11/corona-daily-271-... Corona Daily 271: Pfizer Vaccine – Celebrate with Caution In an earlier chapter on the vaccine race, I wrote: God forbid Pfizer wins the race. God answered my fears. Yesterday, Pfizer announced with aplomb a 90% effective vaccine. Editors changed headlines, stock markets vaulted, people made new Christmas plans, respectable newspapers foresaw the end of the pandemic. The Pfizer vaccine needs to be stored at -80 C (-112 F) all the time. The ultracold logistics rule out most of Asia and Africa. In the best case, it is accessible to 2.5 billion people in 25 countries, mainly North America and Europe. Dr Fauci called the results extraordinary, at the same time admitting he hadn’t seen the data yet. May the vaccine truly have extraordinary success, and spell the end of the pandemic. * When such joyous news is announced, it is in bad taste to criticize or express concerns. The critic will be termed a spoilsport, a pessimist, a conspiracy theorist, or antivaxx activist. I am none of these. I am, however, puzzled by the way Pfizer has gone about the process. I would like to voice these concerns so as to tone down the hype, if it is hype. As I wrote earlier, in the trials, the company must reach pre-agreed numbers of Covid-19 cases, in the vaccine and the placebo groups. Since the beginning, Pfizer has been aggressively demanding more interim points, and fewer cases. Their minimum point for seeking authorization was 32. (32 patients among 30000 participants). Anybody who has studied statistics would know the number doesn’t look significant. In fact, scientists not working for Pfizer raised this concern. This was summer time, and the curve was going down. The Pfizer scientists were worried about the time it may take to reach a higher figure. But they amended protocol to look at the data at 62 cases. Not only the numbers, Pfizer’s plan allowed the mildest cases to be counted. Most other trials including Johnson & Johnson and Oxford, even the Chinese vaccine trial currently, were paused because of adverse events. This is when a participant develops a condition that may have been caused by the vaccine. The trial remains paused until the condition is investigated. Pfizer enlarged its sample size to 44,000 but didn’t face a single adverse event, which must be attributed to its luck. On 26 October, Albert Bourla, Pfizer’s CEO said they didn’t have 32 covid cases yet. The interim data, when available, is reviewed by an independent board. Pfizer was once again lucky, the cases surged dramatically. On Sunday, 8 November, the independent board came, reviewed the data of 94 cases, and let the company management know the conclusion without sharing data. * The trial is not over. It will be over once Pfizer reaches 164 cases. The right thing was to wait till the end of the trials, and then publish the data in a medical journal for peers to review. Once it is peer-reviewed, the results can be published worldwide. Instead of that, Pfizer opted to release unpublished, unreviewed half-baked data as news. Not only that, the news was released consciously early on Monday morning before the US stock markets open. Stock markets are like dogs who will drool and jump at the sight of a dummy bone. When the markets opened, Pfizer shares leaped by 15%, its partner BioNTech’s by 24%, and the major indexes reached new records. Such outright corruption was glossed over in the euphoria of the 90% effective vaccine. FDA now has stricter standards after botching hydroxychloroquine and plasma episodes. Scott Gottlieb, the previous FDA commissioner, is now on Pfizer’s board. That may help in the approval process. * Though times are exceptional, and any vaccine may be better than no vaccine, knowledge of Pfizer’s maneuvers dilutes the joy of their 90% effective news. Ravi

nikolay 6y ago

I just heard that the vaccine is impractical is it needs -70C for storage.

genidoi 6y ago
The pandemic is orders of magnitude more impractical than a end-to-end -70C logistics chain.
thelastname 6y ago
That's a fake news. It's -80C.
- bajsejohannes 6y ago
  A slightly wrong number is not "fake news".
  - mxcrossb 6y ago
    He was being sarcastic
- _Microft 6y ago
  So "fake news" is what we say for "wrong" nowadays? I am getting old as it seems. Pfizer expects the vaccine to be good for up to one week at -8°C to +2°C, so the difference in stability or storage life at -70°C or -80°C might be a small issue compared to what difference it makes on the requirements on the continuous cold chain. It sounds like using dry ice might be a 90/10 solution, as Michael Seibel would call it: get 90% of the result with 10% of the effort.

PJDK 6y ago

Am I missing something as to why anyone finds this outrageous? My understanding of the "wrongness" of insider trading is using privileged information to make profit and thus "stealing" from other investors - at least that's what I've picked up from Matt Levine. In this case he's trading on very public information. Anyone who has held Pfizer stock for a while must have at least considered if this news was the moment to cash some of it in. When he made the decision to sell he'd have known the trial results would have been coming in, but couldn't have known what they'd be. If they'd just come back with a "no go" the stock would have tanked. If anything it seems like an unfair disadvantage, every other long term investor in Pfizer can decide on the day of the announcement what to do, the CEO has to bet months in advance.

caymanjim 6y ago
It's highly unusual to announce such early results of a trial. I don't know if it's illegal, but it sure smells funny.
- deleted 6y ago
  [deleted]
- refurb 6y ago
  This interim analysis was made in agreement with the FDA. Interim analyses are released all the time.
Leherenn 6y ago
I don't know if it is outrageous, but I can see why it might sound shifty. He probably didn't know the results when he made the decision to make the trade, but he might have decided the date of the announcement based on his trade date. The question here is: is "Let's make the announcement on Wednesday. Wait, I have a trade scheduled on Tuesday, so let's move it to Tuesday because I expect an overreaction from the market." illegal or unethical? Or maybe he had no influence on the date and got lucky.
Traster 6y ago
It's quite simple, these trial results don't just get automatically published. He knows he has a sale date coming up, if the results are good, he times the announcement just before his sale - causing a pop to his stock (that likely will mean revert eventually) causing the peak share price to occur around the time he sells. If the results are bad he delays the announcement to the day after his sale, making sure he secures a good price before the inevitable drop. The CEO of Pfizer shouldn't be timing market moving evens based on his personal stock trading.

situationista 6y ago

For the CEO of a company like Pfizer I'd imagine that this amounts to little more than one month's salary.

refurb 6y ago
More like 3-4 months salary. He made $18M last year. https://www.fiercepharma.com/pharma/pfizer-new-boss-bourla-nets-17-9m-2019-pay-as-drugmaker-beat-all-financial-targets https://www.fiercepharma.com/pharma/pfizer-new-boss-bourla-n...

nobrains 6y ago

Please help me understand. Wouldn't it be insider trading if anyone knowing the vaccine news, would BUY Pfizer shares just before the news, and not SELL just after the news?

danielrpa 6y ago

The stock went up 8% on the day of the announcement, giving him a gain of under 400K pretax. This is a lot of money for mere mortals like us, but small potatoes for the CEO of a major multinational company. I find hard to believe he would risk an insider trading lawsuit over this amount, so my conclusion is that this was simply a prescheduled transaction. Have in mind that the increase will stick around for some time (stock still up ~8% since last week) so he would have benefitted anyway selling many days afterwards, or even weeks.

boublepop 6y ago
Assuming he pushed for the announcement to coincide with the preplanned sale he had absolutely no way of knowing how much the stock would potentially jump up. If a bank robber only manages to get away with 100 dollars because the register is low, you wouldn’t come out defending him saying “well the claim is he only stole 100$, and obviously no one would care about such a small amount, so we can conclude that he didn’t actually try to rob the bank”.

ageitgey 6y ago

Here's the deal, since this issue comes up regularly in Hacker News comments: It is 'not illegal' to time an announcement to benefit yourself if you have a 10b5-1 plan in place that automatically sells your stock on a fixed schedule. It's 'not illegal' in the sense that as long as you don't admit you did it, there's really no way to prove it and there's no legal framework for prosecuting you anyway. Lawyers call it 'disclosure timing' and it's one of those often-whispered-about loopholes for the rich. No one admits to disclosure timing, but we all know that it is happening. We know this because on average trades made under 10b5-1 plans get better returns than trades not made under those plans. [1] The law is full of ways for rich people to get richer if they have good lawyers. This is one of them. There's not much incentive to change it either - it is hard to prove, it is complex to explain to the public, and the kinds of people that benefit from it are the kinds of people in power. One of the suggested routes to make the market more fair is to require those with 10b5-1 plans to make their scheduled trade dates public. This would at least give the market at way to guess at disclosure timing too. But again, there's no real political incentive to do this right now. [1] https://clsbluesky.law.columbia.edu/2016/03/30/the-legality-of-opportunistically-timing-public-company-disclosures-in-the-context-of-sec-rule-10b5-1/ https://clsbluesky.law.columbia.edu/2016/03/30/the-legality-... NB: I'm not a lawyer, so obviously don't do anything based on this dumb internet comment.

aquadrop 6y ago
I didn't find statistics about 10b5-1 trades being more profitable in the source, only idea that it should be so. Is there another source?

IdontRememberIt 6y ago

Many other stocks made +30% in one day. For sure, some pfiser employees could have played with "calls" on other companies through proxies and made a lot of money. For exemple, if one has family in an other country, he could have instruct them to buy airbus calls. It is very difficult to detect that.

sirspacey 6y ago

I am 100% ok with a CEO cashing out on top of a success. Anything else effectively makes them a lower-class shareholder. Pfizer is a huge, multi-billion dollar business. The CEO making $5M off a stock sale is relatively minuscule, especially after delivering such a massive win for shareholders.