Dorfman: SEC Launched Insider Trading Probe on Pfizer-Wyeth, Merck-Schering and Roche-Genentech

(MoneyWatch)  The Huffington Post's Dan Dorfman reports that the SEC and FINRA (another finance regulatory body) have launched insider trading probes to figure out whether stock was improperly traded ahead of the wave of recent mergers in pharmaceuticals.

Among the deals under scrutiny are Pfizer's acquisition of Wyeth, Merck's takeout of Schering-Plough, and Roche's buyout of Genentech. Dorfman notes that:

... these investigations are not of the companies themselves, but rather focus on the trading in their securities both here and abroad.

BNET noted on March 10 that Schering's stock rose ahead of the pact and that Merck insiders only disposed of their stock ahead of the deal.

And on Feb. 15 BNET noted that the broker for Pfizer director James Kilts, "the man who sometimes knows too much," sold off a ton of Kilts' Pfizer stock when the company first started talking to Wyeth.

Dorfman:

... Noteworthy among the latest trading investigations is the inclusion of several giant Wall Street deals, with the regulatory focus on the securities of three mammoth drug companies that were acquired for a total of nearly $156 billion. In brief, the SEC, informed regulatory contacts tell me, is looking at the trading that preceded all three acquisitions.

Two of those announced buyouts involve the $68 billion acquisition of Wyeth by Pfizer, the world's biggest drug company, and Merck's $41.1 billion takeover of Schering-Plough. The third was the wrap-up of the $46.8 billion buyout of Genentech by Swiss pharmaceutical biggie Hoffman-La Roch Ltd. Roch had owned 55.9% of Genentech and made a bid earlier this month to buy the rest of the stock at $95 a share.

In addition, a fourth trading investigation involving another sizable drug company takeover -- notably a $1.4 billion buyout of CV Therapeutics by Gilead Sciences -- has commenced by another watchdog, the Financial Industry Regulatory Authority. FINRA, a Rockville, Md., firm, provides regulatory services to other regulatory agencies and 10 exchanges, including the American Stock Exchange and Nasdaq. Its focus is on potential trading violations connected to insider trading.

Image by Flickr user epicharmus. CC.