Merck-Schering: SEC Launches Insider Trading Probe
The SEC has launched an insider trading probe around Schering-Plough and its March merger agreement with Merck, according to the WSJ. Stock in SGP jumped 8 percent on Friday March 6; the merger was announced on Monday March 9.
This graphic shows that on Thursday, SGP stock was heading down before it lifted on Friday (click to enlarge). The big jump comes Monday, when Merck announces it will pay a premium to shareholders to acquire the company. The pattern suggests news of the merger may have leaked before it was officially disclosed — which is against the law.
BNET readers first learned that Schering may be the subject of an insider trading probe back on April 9, when we picked up a Huffington Post item that said as much.
Insiders at Schering did rather well in the Merck deal. Yahoo’s insider trade record shows that not a single Schering insider sold any stock between May 14, 2008 (10 months before the deal) and March 20, 2009, more than a week afterwards. On the latter date and again on April 1, many executives and directors at Schering sold stock, according to Yahoo Finance’s records. At that time, the stock reflected a 34 percent premium offered by Merck.
No allegations of wrongdoing have been made against anyone at Schering. And obviously, the top execs at Schering had $132 million to gain in deal bonuses and nothing to lose by keeping their mouths shut.
Jim Edwards, a former managing editor of Adweek, has covered drug marketing at Brandweek for four years, and is a former Knight-Bagehot fellow at Columbia University's business and journalism schools. Follow him on Twitter or send him an email.
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