Abstract
JNCI Vol. 103, Issue 20 | October 19, 2011 Trading based on material nonpublic information is a criminal violation of the Federal Securities Exchange Act of 1934 and is punishable by a maximum sentence of 20 years and a fine of $5 million. Thus, the suggestion by Rothenstein et al. (1) in this issue of the Journal that insider trading is the cause of observed differences in company stock prices before and after public announcements related to oncology drugs is of grave concern. Specifically, Rothenstein et al. (1) analyzed the stock prices in the 120 days leading up to public announcements regarding phase III trials, and they appear to reject the null hypothesis that the outcome of the trial is unrelated to the stock price behavior before the announcement. Indeed, companies that reported a positive trial demonstrated better price performance (an increase of approximately 14%) during that period compared with companies Oncology Micro-Cap Stocks: Caveat Emptor!
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