Running head: Case Study Report 3
Case Study Report 3
Western International University
LDR 620 Ethics and Corporate Social Responsibility
January 28, 2008
Case Study Report 3
I chose to report upon the case study involving ImClone and Samuel Waksal’s deceitful practices involving selling personal shares of ImClone stock. Samuel Waksal knowingly participated in insider trading which involved selling his ImClone stock and then notifying his family of the impending refusal by the FDA for the approval of their first drug Erbitux. Waksal was privy to non-public information which he knew would negatively impact the value of ImClone stock. Rather than perform his corporate duty and abide by the Securities Act, he made the conscious decision to deceptively sell his shares of stock before the FDA results caused him to suffer huge personal financial losses. Waksal attempted to transfer and sell his stock but was unable to through normal channels, as the stock was restricted and required the approval of ImClone legal counsel. When this attempt to unload his stock failed, he purchased put option contracts on ImClone stock through a Swiss bank. These put option contracts resulted in high profits when he sold the put options on January 4, 2002. Waksal informed his daughters Aliza and Elana of the impending bad news from the FDA. Both Aliza and Elana immediately sold their ImClone shares. Waksal called his father, Jack Waksal, and informed him of the impending FDA results. The next day, Jack Waksal called Prudential Securities and placed an order to sell 1,336 shares of ImClone stock from the account of Patti Waksal, Samuel’s sister. Jack Waksal sold a total of 136,000 shares of ImClone stock to avoid financial losses. Each family member sold their stock and as a result of doing so before the FDA announcement, they collectively avoided over millions of dollars in losses. ImClone’s stock share price was around $72 per...
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