SEC Probing Amylin for Possible Breach of Fair Disclosure Rule in Call to Investors
Shares of Amylin Pharmaceuticals Inc. slumped anew Monday after the San Diego biotech company indicated that securities regulators were looking into a conference call the firm held last week with select investors.
The company participated in a private call with clients of brokerage Goldman Sachs & Co. on Thursday -- the morning after the Food and Drug Administration declined to approve the firm’s diabetes drug Symlin, pending the receipt of more data.
Late Friday, Amylin said the Securities and Exchange Commission “is conducting an informal inquiry related to recent communications” about Symlin.
Amylin said it “believes that this inquiry relates to compliance with” Regulation Fair Disclosure, a 3-year-old SEC rule that prohibits companies from selectively releasing information that could affect their share prices.
Amylin shares sank $1.55, or 6.6%, to $21.88 on Thursday. The stock rebounded 51 cents on Friday, then slid 63 cents, or 2.8%, to $21.76 on Monday on Nasdaq.
The company held a second investor conference call late Thursday, after markets closed. That call was broadcast over the Internet.
Amylin officials didn’t return phone calls seeking comment Monday. An SEC spokesman declined to comment.
Goldman Sachs spokesman Lucas van Praag in New York declined to discuss whether the information shared by Amylin executives during the private call might have violated the fair disclosure rule.
Van Praag said he didn’t know whether any Goldman employees who had heard the call had made trades as a result of the information, but he added, “We believe that we acted appropriately.”
TheStreet.com reported last week that an unidentified Goldman Sachs client, who participated in the private conference call, said Amylin Chief Executive Ginger Graham had given “material information” to those investors on the line. The investment website reported that the client sold Amylin shares during the call because it became clear that the company “faces a long road to get Symlin approved.”
To pursue a fair disclosure violation, the SEC would first have to determine whether Amylin disclosed during the Goldman Sachs call any material information that could have moved the company’s share price -- and that wasn’t generally available to all investors, lawyers said.
If regulators conclude that material information was released, they also must determine if it was accidental or intentional, lawyers said.
If the release was unintentional, Amylin could have “cured” the breach by immediately disseminating the same information broadly, said UCLA law professor Stephen Bainbridge, who is the author of three books on corporate and securities law.
But it’s uncertain whether the second conference call Thursday would satisfy the broad-dissemination requirement, experts said.
