This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration. Need a new registration confirmation email? Click here
TheStreet) -- I'm going to let you in on a big secret: Publicly traded companies routinely share material, stock-moving information in advance and under embargo with reporters and sell-side analysts.
"Under embargo" is important: It means that in exchange for a sneak peek at data from important clinical trials (to use an example), reporters and analysts are not allowed to discuss, share or publish stories or reports based on the embargoed information until it is announced publicly.
Needless to say, reporters and analysts aren't supposed to trade on the embargoed, material information either -- lest they run afoul of insider-trading laws.
Shocked? Surprised? Don't be. Embargoed, "pre-briefs" between companies and reporters/analysts are a very common practice. They happen every day. Most recently,
Vertex Pharmaceuticals(VRTX - Get Report) called me to share and discuss data on its cystic fibrosis drugs the night before the company released the same data in a press release.
Alkermes(ALKS - Get Report),
Johnson & Johnson(JNJ) and
Exelixis(EXEL) are just some of the biotech and drug firms that have shared material information with me under embargo.
The Next Big Thing in Biotech: Vivus
It's not just companies who eagerly and enthusiastically provide reporters with advanced access to important information under embargo. Every Friday, I receive via email an advanced copy of the following week's
New England Journal of Medicine -- before it's mailed out to subscribers. All major scientific and medical research journals provide the same service to members of the media. Likewise, groups which run the big medical conferences -- American Society of Clinical Oncology, American Diabetes Association, the American College of Cardiology, etc. -- all provide reporters embargoed access to the splashiest, most important clinical data early.
Why am I spilling the beans on this nice media perk? Because sometimes the practice goes horribly wrong, as it did Tuesday around noon when
USA Today published early and accidentally a story announcing the approval of
Vivus'(VVUS - Get Report)weight-loss pill Qsymia. In media jargon,
USA Today "broke" the embargo and in doing so, caused hours of confusion and havoc for investors who didn't know whether the Vivus approval story was true or a hoax. Trading in competing weight-loss stocks
Arena Pharmaceuticals(ARNA - Get Report) and
Orexigen Therapeutics(OREX - Get Report) was also affected.