On Tuesday, the SEC announced
that it had filed a
complaint in the U.S. District Court charging a former employee
of Medivation Inc., an oncology-focused biopharma, with insider
trading in advance of Medivation's announcement that it would
be acquired by a big pharma company. But it's not what you
might think. The employee didn't trade in shares of Medivation
or shares of the acquiror, nor did he tip anyone about the
transaction. No, according to the SEC, he used the information
about his employer's acquisition to purchase call options on a
separate biopharma company, Incyte Corporation, which the SEC
claims was comparable to Medivation. According to the SEC, the
employee made that purchase based on an assumption that the
acquisition of Medivation at a healthy premium would probably boost
the share price of Incyte. Incyte's stock price increased after
the sale of Medivation was announced. The SEC charged that the
employee breached his "duty to refrain from
