The Skinny On Vivus
The Financial Industry Regulatory Authority (FINRA), the stock markets' self-policing arm, is looking into trading in Vivus shares around the time it announcedits positive late-stage test results on its diet drug, Qnexa.
Until September 8th, several hundred thousand VVUS shares typically changed hands each day.
The volume jumped to 1.6 million shares on the 8th and then skyrocketed to 75 million shares on the 9th when the press release came out.
The stock closed at $6.91 on the 8th and surged to $11.80 on the 9th.
FINRA has all sorts of built-in computer programs that raise red flags about trades. And apparently some went up during that time because FINRA investigators have given Vivus and anyone outside the company who had access to the embargoed data until January 26th to look over a long list of people and companies that traded in the stock back then and to reveal, in detail, any relationships with the names.
The company has not disclosed the probe. Through a spokesman, Vivus says the inquiry is preliminary and routine and that it's cooperating with FINRA.
It's anyone's guess if the FINRA review of Vivus trading will turn up anything. As it wrote in a recent letter to the company informing Vivus that the probe was continuing, "This inquiry should not be construed as an indication that the staff has determined that violations of FINRA conduct rules or Federal Securities Laws have occured, or as a reflection upon the merits of the securities involved or upon any person who effected transactions in such securities."
Vivus is one of three companies in the home stretch of trying to bring the first new prescription diet pill to market in more than a decade. Arena Pharmaceuticals and Orexigen are the other two. VVUS and ARNA have already filed for FDA approval. OREX is expected to submit its application soon.
- Watch: The Battle Against Obesity
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