Friday, January 27, 2012

The SIGA Pump and Dump

I've previously addressed the SIGA scandal, here, here, and here. A brief refresher:

Ron Perelman, major Democrat Party donor, bought controlling interest in SIGA--originally a small biotech firm--and shortly thereafter, SIGA received a contract to develop and produce a new Smallpox treatment, for use on people who could not be vaccinated in time against Smallpox (supposing some kind of massive outbreak).

SIGA initially received the contract--worth over a billion originally, but cut back to some $433 million--as a small business, thus allowing bids to be limited. But then, Chimerix--another form--protested, claiming that SIGA did not qualify as a small business. The SBA agreed, which should have resulted in either Chimerix--the only true small business applicant--getting the contract or having an open bid. Instead, Administration officials declared that the contract would remain with SIGA, essentially rigging the game, for Perelman's (and Andy Stern's) benefit.


The treatment being developed is essentially untestable. The justification for having it available at all is highly questionable (remember, Smallpox only exists in labs, these days). And--even worse--the shelf life for the treatment is only three years, meaning new stockpiles would have to purchased again, and again, and again.

Nonetheless, the deal is still in existence. But because of the large drop in the contract amount, SIGA stock nose-dived last year. Now, it turns out that SIGA executives dumped large chunks of company stock, prior to the dive, netting themselves millions (a hat tip to Michelle Malkin for catching this development). Of course, the company claims that nothing improper or illegal occurred. And that might very well be true, on the surface.

But the entire episode plays like one big swindle. A next to useless product is ginned up, a bid for that product is handed out to a company designed to get the bid and nothing else, then the stock--having risen sufficiently, based on a phony large number--is sold off. Now the stock is in the toilet and the principles are loading up again, knowing that the lesser deal can be ramped up in the future, after the dust settles, and the game can just be repeated. Some would call this a classic "pump and dump" scenario.

And the Administration appears to be either fully culpable in this, or grossly ignorant of what is happening. And that's kind of funny, given Obama's calls for Congress to straighten up their investment activities in his most recent SOTU speech.

Cheers, all.

No comments:

Post a Comment