Sen. Grassley Asks SEC To Proceed With Investigation Into Reports Physicians Sold Trial Data to Wall Street Firms

Kaiser Network
Daily Health Policy Report
Capitol Hill Watch
May 09, 2006

Senate Finance Committee Chair Chuck Grassley (R-Iowa) last week asked the Securities and Exchange Commission to proceed with an investigation into whether physicians involved with clinical trials sell confidential information to stock analysts and investors, the Seattle Times reports (Mundy, Seattle Times, 5/8).

The Times in an August 2005 article reported at least 26 cases in which physicians sold information about ongoing trials to Wall Street firms. In response to the article, Grassley sent letters to SEC and the Department of Justice that requested investigations into the issue (Kaiser Daily Health Policy Report, 8/9/05).

Last week, Grassley sent SEC a Congressional Research Service report completed in November 2005 that states, "Thus, if the facts in the article are accurate, it is arguable that the described Wall Street analysts may be violating section 10(b) of the Securities Exchange Act." Section 10(b) is the anti-fraud statute of the law.

Grassley asked SEC to respond to the CRS report no later than June 2. In a letter to SEC Chair Christopher Cox, Grassley wrote that "the integrity of the scientific process itself is compromised by clinical researchers who disclose ... the details of ongoing research." SEC spokesperson John Heine declined to comment on the issue (Seattle Times, 5/8).

Labels: Department of Justice