Oh James, What’s a Centimillionaire?: 2001 Insider Trading Wrap-Up

“The future is already here; it’s just not evenly distributed.”{{1}}[[1]]William Gibson, science fiction author[[1]]

2011 was a BIG year for insider trading, centimillionaires{{2}}[[2]]At least $100 million[[2]], wire-taps, and hidden microphones.  Time to call in James Bond.

Directors of Wall Street firms connived with hedge fund tycoons who were detained as flight risks and slammed with 11 year prison sentences.  But, the intrigue was not confined to Wall Street — the health care industry got into the act as well.  An FDA chemist and a hedge fund operator entered guilty pleas for sharing advance notice of drug approvals. A pension actuary leaked health care merger information to a movie producer. A big-time university physician called “Dr 1” leaked results of a test drug to a hedge fund operator.  There was even a Q&A in the NYTimes on whether it’s OK to “crank up your hearing aid” to gain insider information by eavesdropping.  The answer was basically “yes” which could open up a whole new market for dispensers.  Who said 2011 wasn’t fun?

The hearing aid stratosphere was shaken by its first-ever multimillion dollar insider trading case when the Swiss stock exchange (SIX) and the Zurich District Attorney’s office opened criminal investigations into dealings at Sonova.  In a single trading day, Sonova’s market value dropped by 23%.  We described the situation in a previous post and discussed legal/ethical implications of insider trading in a second post. The following summarizes events and subsequent stock price changes through the end of the year, shown graphically in Table 1.

Figure 1. 2011 Sonova Stock Prices (Swiss francs)

 

  • 3/02/2011:  Sonova’s stock price hits its high for the year — $137.15US/share.
  • 6/21/2011:  All Board resolutions approved at the annual shareholders meeting, including a dividend of 1.20 Swiss francs per share.{{3}}[[3]]Not sure what that was back then, but in today’s currency exchange, that’s about $1.28 US dollars/share.[[3]]
  • 6/22/2011:  In a late-night clarification of the 6/21 shareholders vote, Sonova announces absolution of all 2011 board members, who were “discharged of their activities” for the year. The action clears former Chairman and current Board member Andy Rihs of wrong doing, though he is not reinstated as Chairman.
  • 6/27/2011:  Newspapers breathless reports that institutional investors may sue Sonova over “losses on shares after scandalous stock sales.”  Guess the shareholders’ vote of absolution wasn’t unanimous?
  • 6/28/2011:  Stock price drops to $92.50US/share and keep heading south…
  • 9/08/2011:  Stock price hits its low for the year — $74.91US/share.
  • 9/27/2011:  Lukas Braunschweiler–scientist and multinational bio-business expert–appointed CEO, effective 11/1/11.
  • 10/20/2011:  6-month sales top expectations and stock shoots up 13%, making Sonova the “top gainer” on the pan-European index.  Sonova says it is (back) on track to hit annual sales targets.
  • 10/27/2011:  Stock price rises to $108.95US/share.
  • 10/28/2011.  Last call for investors to sue Sonova over the insider trading.  One financial investment advisement group (Deminor) states that over 25 institution investors have hired Deminor to represent them in the case.{{4}}[[4]]European law does not use the equivalent of  US Class Action suits.[[4]]
  • 12/01/2011:  Sonova subsidiary Advanced Bionics announces US and Canadian approval of its Waterpoorf Neptune Sound Processor for cochlear implants.
  • 12/06/2011:  Stock price rises to $104.00US/share.
  • 12/29/2011:  Stock price ends the year at $102.50/share.

Not the best year for Sonova stock, not the worst.  As to the Sonova principals:  Valentin Chapero and Oliver P Walker list themselves as Advisor and Entrepreneur,  respectively, in Zurich.  Co-founder Andy Rihs remains a non-executive member on the Sonova Board of Directors. Not a peep from the Swiss investigations.  At the end of the year, it seems that the hearing aid stratosphere was just stirred, not shaken.  Not the way 007 likes it.  Back to business as usual and no James Bond for us.

photo courtesy of Photo Bucket



About Holly Hosford-Dunn

Holly Hosford-Dunn, PhD, graduated with a BA and MA in Communication Disorders from New Mexico State, completed a PhD in Hearing Sciences at Stanford, and did post-docs at Max Planck Institute (Germany) and Eaton-Peabody Auditory Physiology Lab (Boston). Post-education, she directed the Stanford University Audiology Clinic; developed multi-office private practices in Arizona; authored/edited numerous text books, chapters, journals, and articles; and taught Marketing, Practice Management, Hearing Science, Auditory Electrophysiology, and Amplification in a variety of academic settings.