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Overview of the Imclone case

The ImClone case is about insider trading. Here is the background information regarding the case.
Sam and Harlan Waksal started ImClone in 1984. From there, in 1993, the brothers purchased the rights to the molecule C225. The molecule was discovered by Dr. John Mendelsohn at the University of California San Diego. C225 is an anti-cancer drug that can distinguish between cancerous cells and healthy cells. C225 would be able to shrink cancer to a surgically removable size. C225 would later be given the brand name Erbitux.
In May of 2000, Sam Waksal presents the case of Shannon Kellum at the American Society of Clinical Oncology. It was demonstrated that grapefruit sized tumors would be shrunk to the size of peas and then surgically removed.
A year later in September 2001, Bristol-Myers Squibb Co. agrees to buy a 20 percent stake in the company and for the rights to sell the cancer drug Erbitux in the U.S. and Canada. The tender offer valued ImClone at $70.00 per share.
On December 12 of 2001 ImClone and Bristol-Meyers meet with FDA on Erbitux, their last meeting with regulators before receiving official news the FDA would not review Erbitux. The FDA had concerns about Erbitux.
December 26, 2001 Waksal received a tip from his brother Harlan, that the FDA would reject the Erbitux application and the tried to sell 79,797 shares of ImClone. He was unable to complete the sale due to two different brokerages refusing to issue sale orders.
The next day family and close friends of Sam Waksal sell almost $3 million worth of stock, including Sam’s daughter Aliza and home style guru Martha Stewart, a friend of Sam Waksal. The stock closes at $58.30.
On December 28, 2001, ImClone announces that the U.S. Food and Drug Administration reject the application for Erbitux, saying the drug did not satisfy requirements. The stock begins a precipitous decline taking it down to the high teens.
On Jan 25, 2002, the U.S. Securities and Exchange commission and the Justice Department launch probe into ImClone and Waksal.
Feb 14, 2002 Waksal notifies the Securities and Exchange Commission for the first time of 50 trades he made in ImClone stock going back as far as 1992. These transactions should have been reported within months.
A few months later, Sam Waksal is arrested on charges he illegally acted on insider information in selling ImClone and by telling family members to do the same. By August Sam Waksal, already charged with insider trading, is indicted for obstruction of justice and bank fraud in a case that has rocked investor’s confidence. Waksal is accused of pledging ImClone securities he no longer owned to secure a $44 million loan and forging the signature of ImClone’s general counsel to fool the bank into believing he still owned the securities.
By August 14, 2002, ImClone sued Sam Waksal, claiming Waksal ordered the destruction of documents that may be important in a government investigation into the company.
The Imclone scandal is one of many scandals that show what can happen to a company if wrong and unlawful decisions are made. In this paper I will identify and define the ethical problems violated by certain employee’s at Imclone, which in part led to the scandal and imprisonment of several people. The first ethical problem and most obvious one to identify in this scandal is insider trading.
Illegal insider trading involves, “trading in a security (buying or selling a stock) based on material information that is not available to the general public” (Reh, 2010). This specifically means having certain information that the general public does not have either from inside sources or by being an insider. This would give people privileged information in order to help them make a financial decision. It is prohibited by the Security Exchange Commission because, “it is unfair and would destroy the securities markets by destroying investor confidence” (Reh, 2010). The stock market is driven by fair practices and confidence that the “man on the street” can have access to the same public information a corporate analyst has access to. The following examples describe instances of insider trading that have been reported to the SEC:
“Corporate officers, directors, and employees who traded the corporation’s securities after learning of significant, confidential corporate developments” (Astarita, 2010).
“Friends, business associates, family members, and other tippers of such officers, directors, and employees, who traded the securities after receiving such information” (Astarita, 2010).
“Other persons who misappropriated, and took advantage of, confidential information from their employers” (Astaria, 2010).
These are just a few examples of illegal insider trading and similarly describe what took place at Imclone with CEO, Sam Waksal. Sam discovered inside information that would lead to a drop in the company’s stock. Now, knowing and acting are two different things when it comes to insider trading. It is understood that certain people inside a company will know valuable information as regards to its stock going up or down. The criminal and unethical behavior comes when that person tells his friends and family members about that information. This is exactly what Sam Waksal did and this is what got him and the company into some major trouble.
Most public companies will limit the number of people who have access to the inside information. This is done to decrease the likelihood of insider trading. However, even if you have a small number of people on the inside, it will ultimately come down to the individual and the ethical standards to which they live their life by. It only took one man to start the insider trading scandal, and that’s not even all he did. Two other ethical problems that were indirectly related to Imclone involved Sam Waksal and his own personal ethics. His attempts at forgery and tax fraud did not hurt the company per sea, but helped confirm the type of unethical CEO that he was.
Forgery can be defined as, “the act or legal offense of imitating or counterfeiting documents, signatures, works of art, etc. to deceive” (Webster’s, 2009). This basically means falsifying something with the intent of misleading others so that you may appear to have done something truthful. With regards to ImClone’s CEO, it was reported that Sam Waksal forged a signature of the company’s general counsel, John Landes, in a statement pledging ImClone stocks in order to obtain money in loans from Bank of America. This was….
Fraud can be defined as, “something said or done to deceive” (Webster’s, 2009). Another definition, and one that more closely identifies personal ethics defines fraud as a, “person who deceives or who is not what he or she pretends to be; a cheat” (Webster’s 2009). Regarding Sam Waksal’s personal morality, he failed to pay sixty million dollars in personal income taxes on certain stock grants given to him by ImClone. He pretended for a long time to have paid these, when in reality he had not. It was only a matter of time until his fraudulent actions finally caught up with him.
As you can see, any one of the previous ethical problems can bring companies to scandalous ruin. What we see in all three of the problems is one man who decided to behave unethically. That is all it takes and that is why ethics is so important; especially for the men at the top.
Imclone employees and associates are clearly in violation of numerous laws and multiple ethical principles. One would think that a scandal involving accounting fraud and insider trading would not only damage a company initially, but result in long term detriment to the organization. There is a significant and gradual decline in the “shame on you” perception of the general public, as is evidenced by the most recent financial transactions of the company. Even with the barrage of media attention to the Imclone scandal, ethical attitudes appear to change over time.
Martha Stewart, the homemaker tycoon, was charged with and convicted of insider trading involving Imclone. She held numerous shares of Imclone stock and sold all holdings the day before the announcement from the Food and Drug Administration (FDA) announced that they would not approve Imclone’s drug, Erbitux, for cancer treatment. Predictably, shares of Imclone stock dropped significantly the day of the announcement. Martha Stewart sold all shares at fifty eight dollars per share and saved a predicted $40,000 by selling all holdings before the fall. Stewart claimed that she had a “verbal order” to sell all holdings if the stock dropped below $60 per share. However, one day before the announcement from the FDA, while she was traveling on her charted jet to Mexico for vacation, Stewart placed a phone call that lasted approximately eleven minutes to her stockbroker. Shortly thereafter, he sold all of her holdings. The next day the announcement was made and the rest as they say is history.
Martha Stewart, not Imclone, seems to be the one who received the most lasting negative impact from this scandal. MSO stock traded at a high of about $16 per share prior to the insider trading scandal. Once Martha Stewart was indicted and later convicted, MSO stock dropped to less than $8 per share. Currently, MSO stock is trading around $5 per share.
In 2002, Imclone shares fell as low as $5.85 per share. Imclone’s drug Erbitux was eventually approved and posted sales of 1.3 billion in 2007. In 2008, Bristol-Myers Squibb Company tendered an offer to purchase Imclone for $60 per share. Ironically, this is almost the same price point where Martha Stewart dumped her stock before the fall in 2001. Eli Lilly tendered an offer in 2009 for $70 per share, which totaled approximately $6.5 billion. The offer was approved and Eli Lilly purchased Imclone.
Multiple players crossed ethical boundaries during the Imclone scandal. These include individual investors (Stewart), Imclone senior leadership and stockbrokers. They knew what they were doing before they did it and they got caught. Martha Stewart is one of the principal reasons that this case got so much media attention. The Imclone scandal alone was not really that newsworthy nor was it much different than the multitude of other financial scandals during the early years after 2000. We have Mrs. Stewart to thank for bringing this to the forefront of America. For the business world, and the American Public in particular, the Imclone ordeal serves as an example of deceit, greed, insider trading and scandal. It also proves that if you knowingly choose to break the law, and if you get caught, the government will prosecute and you could serve time in prison. If you do not think it could happen to you, just ask Martha Stewart.

Fasciola Hepatica: Treatment and Prevention

INTRODUCTION Fascioliasis is a helminthic disease caused by Fasciola Hepatica (liver fluke), which spans worldwide, affecting livestock such as cattle and sheep, which become infected by ingesting water or plants such as watercress, lettuce and spinach (Alatoom et al, 2008).
The life cycle of Facisola Hepatica begins when eggs are excreted in the feces of an animal which has been infected. Facisola Hepatica Miricidia move on to its intermediate host (freshwater Lymnaea snail), where it develops into the cercarial form. The Cercariae then leave the snail and encyst on the vegetation of fresh water, until developing into its metacercarial stage. Grazing sheep or cattle ingest the metacercariae, the infective form excyst in the intestine, passing through the peritoneum, later gaining access to the live and bilary tree (Alatoom et al, 2008).
Due to migration of the liver flukes, the liver is left necrotized which compromises the function of the liver in animals. These complications may include change in the component of blood, hepatic pathogenesis, liver trauma, decreased lactation, and death (Brennan et al, 2008).
Fascioliasis has resulted in a significant loss to farmers and inturn affects the economy as a whole. To control the parasites which cause this disease, treatments such as anthelmintic drugs have been employed in some areas. But as with most drugs problems have arisen, most importantly the development of resistant in parasites to the chemical drugs (Anandaraj et al).
This review paper will cover different treatments available for fasciola hepatica, how the parasites have developed a resistance to the available treatment, and new methods in which researchers are trying to combat the drug resistant parasites.
Citronella oil and Neem oil For Treatment Anthelmintic drugs have been used to control fasicoliasis disease, but there has been concern over parasites and developing resistance to the drugs. Citronella oil which is collected from dried grass of the species Cymbopogan nardus, and Neem oil which is also collect from dried seeds of the species Azadirachta indic (Anandaraj et al).
Experiment were conducted in vitro, exposing the liver flukes to Citronella oil, neem oil, oxyclozanide drug powder treated control and normal RPMI-1640 control at room temperature, in separate petri-dishes. After staining of the dead flukes, flukes were observed under a microscope. Results demonstrated that citronella oil demonstrate flukicidal effect which is very similar to that of oxyclozanide, which affects the tegument, intestinal caeca and uterus of the flukes. But due to no previous study of the effects of these oils on endoparasites , the mechanism by which these oils react to the parasites in not understood (Anandaraj et al).
Triclabendazole Drug Treatment Triclabendazole is a drug derived of benzimidazole and is the current drug of choice in the treatment of fascioliasis. Triclabendazole has shown to target Fasciola Hepatica (liver flukes) from as early as 3 days old to fully mature stage, and more importantly, this drug has been shown to successfully eradicate liver fluke infections in humans. (Brennan et al, 2008).
For this experiment Eight indoor-reared Dorset X Suffolk sheep approximately 8 to 10 months of age, with no prior liver fluke infection were collected. Sheep stool was examined for fluke eggs to ensure no prior infection to the Fasciola hepatica. The sheep were then artificially infected by oral gavage with metacercarial cysts, which have previously shown to be susceptible to the Triclabendazole drug. Dividing the sheep into two groups, two sheep were used as a control received no treatment, while six were treated with Triclabendazole four weeks after artificial infection. (Brennan et al, 2008). At each time interval 48, 72, and 96 hours, two sheep were euthanized and livers removed for examination and collection of liver flukes, this was also done for control sheep, which were euthanized after 48 hour post treatment.
Visual observation demonstrated that liver flukes in the untreated sheep very active with their guts full of contents. Flukes recovered from the treated sheep after 48 hours of treatment were active and clear sign of visible contents in the gut of the liver flukes. When compared to the liver flukes of the control, these showed no differences in appearance and activity. Liver flukes recovered from sheep after 72 hours of treatment were all dead with no gut contents, except for one which displayed minimal activity and little contents in the gut. Liver flukes recovered 96 hours from sheep post-treatment were all dead, displaying a very pale grey color, with no contents within the gut (Brennan et al, 2008)
It was observed that the effects of the drug progressive overtime time, affecting the flukes more severely as time passed. On observation of the liver flukes recovered 48 hours post treatment, normal morphology was noted, there was some minor swelling of the parasites tegument. On examination of the surface morphology of the dead liver flukes from sheep treated at 96 hours post-treatment, the surface of the parasites were very serve and extensive. This Included massive loss of tegument in all flukes, the basal lamina of the fluke was exposed as the entire syncytical layer had been decorticated. Lesions exposing the inner tissues of the fluke were also observed in the basal lamina. (Brennan et al, 2008)
Researchers therefore concluded that treatment with Triclabendazole is effective in eradicating a vast majority of liver flukes in sheepwithin a three to four day period after treatment. The severity of the disruption of the parasites tegument increased over time, resulting in the total loss of tegumental syncytium and lesions as deep as the basal lamina (Brennan et al, 2008).
One draw back of this drug is that is is prohibited in the use of animals that produce cheese intended for feeding humans (Cringoli et al, 2006).
Parasite Drug Resistance and Development of New Treatment With Triciabendazole being the drug of choice for the treatment of fasciola hepatia in vetenary medicine, due to the drugs ability to fight against both juvenile and adult stages of fasciola hepatica. Over time concerns have stirred up over Triciabendazole resistant fasciola hepatia, which were first observed in Australian livestock though the mid-1990’s, and has now spread across Europe and most recently, Spain. The need to develop new drugs to treat fascioliasis has become a pressing issue. Some researchers have experimented with OZ78 and Artemether for the reactivity against adult fasciola hepatia resistant to Triciabendazole (Keiser et al, 2007).
30 rats were infected with 20-25 metacercarial cyst of Oberon. Oberon was reported to have low cure rates in sheep treated with Triciabendazole. 10 rats were then infected with 20-25 metacercarial cyst of cullompton isolates. Cullompton isolates were previously identified as Triciabendazole-sensitive. 12-15 weeks after infection, rats infected with Oberon isolate were treated with Artemether and OZ78. Two groups of rats were treated with triciabenazole in different dosages, and six treated with artemether and OZ78, with untreated rats as a control. Four of the rats infected with cullompton isolate were treated with triclabenazole, and six of the rats treated with cullompton isolate remained untreated with no drugs, serving as a control. 17 days after treatment, rats were euthanized and bile ducts were harvested for observation (Keiser et al, 2007).
Collected results demonstrates that Triclabendazole was not suffiecient against Triclabendazole-resistant Oberon isolate of Fasiola hepatica. Though at higher dosage there was a significant worm burden reduction observed. Both Artemether and OZ78 were very effective in treating Triclabendazole-resistant isolate of Fasiola hepatica, both resulting in worm burden reduction by 100%. (Keiser et al, 2007).
Efficacy and safety of New Treatment Due to promising action of artemether against liver flukes in rat models, researchers have found it necessary to study the efficacy and safety of this drug in which have been naturally unfected with fasciola hepatica (Keiser et al, 2008).
Using Dairy sheep from farms in southern italy, stool samples were collect from 100 sheep, which were randomly selected. All sheep tested positive for fasciola hepatica were used in the study, with an overall collection and examination of 5 stool samples. Sheep were separated in groups depending on their weight and mean eggs count. Group one containing seven sheep remain untreated, groups two and three, containing six sheep each where orally treated with one dose of arthemether at 40 and 80 mg/kg, the last three groups four, five and six, each containing 5 sheep received 40, 80 and 160 mg/kg respectively intramuscular injections of artemether. The sheep were observed for any signs of adverse effects for a period of 8 hours, and once daily after treatment. On days 10 and 27 three to four stool samples were collected for examination for egg burden. All sheep were then slaughtered, removing livers and harvesting and counting fasciola hepatica present.
Sheep exhibited no physical or clinical signs of toxicity after being treated orally or intramuscularly 8 hours post treatment. Researchers found that statistically there was no significant reduction in egg count in either oral or intermuscular drug administration, except for administration of 160 mg/kg, where a significant egg count reduction was noted and 64.9%.