Former University of Michigan medical professor Sidney Gilman lived 'parallel life' with Wall Street
Sidney Gilman
Courtesy U-M
Gilman is accused of sharing nonpublic information about a clinical trial of an Alzheimer's drug to a hedge fund portfolio manager, leading to massive multimillion-dollar trades. Gilman, who served as chairman of the safety committee overseeing the trial, entered into a non-prosecution agreement with the Securities and Exchange Commission in exchange for cooperating with the investigation.
His conversion to a Wall Street consultant came abruptly in his late 60s, the Times reported, and was a well-kept secret from his colleagues.
Gilman consulted with more than 40 clients on drug development and drug trials. He participated in up to 100 meetings a year that each paid around $1,000.
Gilman, 80, retired last month from U-M, which said it is conducting an internal review of his involvement in the case. The university is now reviewing its policy governing consulting by employees.
For more, read the New York Times story.
Comments
JRW
Mon, Dec 17, 2012 : 8:33 p.m.
Why is this article no longer posted on AA dot com? I had to access it through my comments. It had disappeared from the AA dot com website.
JRW
Mon, Dec 17, 2012 : 8:27 p.m.
I suspect the SEC and FBI decided to use Gilman to go after the bigger fish, the trader involved. However, Gilman still walks away with only a fine he can well afford ($234,000), no criminal record, and the UM allowed him to retire, which I don't agree with. He should have been fired, which would have meant no pension and no lifetime paid health benefits. So, he got a pretty good deal for being a criminal.
Jay Thomas
Mon, Dec 17, 2012 : 8:17 p.m.
A slap on the wrist. He should be sent where Martha Stewart was.
JRW
Mon, Dec 17, 2012 : 8:01 p.m.
I've got a hunch that Gilman isn't the only dr at UMHS who is involved with these information networks that provide insider info to big traders.......he may be the one that got caught. I don't know what UMHS policies are re: external activities while employed as a dr, but those policies didn't stop Sid from playing it both ways.
Nicholas Urfe
Mon, Dec 17, 2012 : 6:35 p.m.
There is never just one roach. Do we think there are no other roaches? Or that they have just not been caught? Or maybe they have been caught and the information was kept quiet to protect the Umich reputation?
BhavanaJagat
Mon, Dec 17, 2012 : 6:06 p.m.
KNOWLEDGE IS POWER: Now, the University of Michigan must define the term "GREED."
Rick Stevens
Mon, Dec 17, 2012 : 5:58 p.m.
Sad tale. But ultimately, money and fame corrupts.
Chase Ingersoll
Mon, Dec 17, 2012 : 1:48 p.m.
Sounds like he was being well paid for giving accurate opinions. The whole concept of "insider information" has an inherent contradiction in that it attempts to create a level playing field where the best information on the value of a company is with-held until it can be released to all. But that is simply not how information works and unless we want to the government to become "Minority Report" how is this ever going to be policed. I personally don't understand anyone investing in a company unless they have a quality of information that would be legally categorized as "insider".
Kai Petainen
Mon, Dec 17, 2012 : 6:20 p.m.
Rick -- not at all. I'm referring to LEGAL insider buying and selling.
Kai Petainen
Mon, Dec 17, 2012 : 6:02 p.m.
clarification on insider buying -- i'm referring to legal insider trading. they just need to declare it. I believe they have 2 days to declare it. as an example, here is a listing of insider trades at JNJ http://tinyurl.com/cdwj2qr
Rick Stevens
Mon, Dec 17, 2012 : 6 p.m.
Kai Petainen: OK, I give up. What are you saying? Go with corruption and lies? Or what?
Kai Petainen
Mon, Dec 17, 2012 : 5:53 p.m.
Chase... I like stocks that have value like a low PE and a low price/book. I like stocks that have growth. Sales growth and earnings growth. I like stocks that have insider buying and institutional buying. I like stocks that have a lower probability of fraud and they have conservative accounting. Stocks like that, can appeal to a lot of investors... and hopefully they go up. They are good quality, good value, good growth stocks.
Goober
Mon, Dec 17, 2012 : 3:08 p.m.
I have no insider information as you define, but invest in many quality companies (ie - P&G, Johnson & Johnson, Honeywell, etc.) based on their revenue, profit and strategic objectives. Your argument and position is not logical! This professor scammed the law, the U-M and hopefully, will be brought to justice.
mkm17
Mon, Dec 17, 2012 : 12:10 p.m.
The obvious conflict of interest is a huge deal. I don't understand how U-M could permit him to retire with full pension and benefits. I'm biased because Dr. G. cared for my Mom, who had Alzheimer's disease. I'm feeling a huge sense of betrayal. Since it appears Dr. G was corrupt, I'm wondering what other unethical actions he took?
FormerMichRes
Mon, Dec 17, 2012 : 5:20 a.m.
This is just the tip of the iceberg. Also, how effective can an 80 year old be in a high tech environment? There is alot wrong here ... and an external review is necessary -- not an internal review.
Lemmy Caution
Mon, Dec 17, 2012 : 4:55 a.m.
Read this article on the front page of the print edition of NYTimes this morning. An excellent story circling on the mysterious "why" question. What changed late in this man 60s that led him on the chaffeur-driven, first-class path to the dark side of insider trading? There's still more to explore. Made me wonder why in the world the Ann Arbor News hadn't sent its best reporters out to do this story first. This is such a sad little "newspaper" for such an interesting small city. But maybe this paper will follow the story further--digging further through interviews and investigation about town and elsewhere.
DennisP
Mon, Dec 17, 2012 : 11:54 a.m.
"Made me wonder why in the world the Ann Arbor News hadn't sent its best reporters out to do this story first. " It doesn't have any.
Michigan Man
Mon, Dec 17, 2012 : 2:07 a.m.
Not a great year at U of M hospitals - Gilman scandal, downgrading of bonds, violence on hospital campus, residents with porn, nurses being accused of inappropriate conduct with patients, significant operating budget problems, etc. What am I missing?
Jay Thomas
Mon, Dec 17, 2012 : 8:24 p.m.
Pescovitz... you're doing a heck of a job!
Thaddeus
Mon, Dec 17, 2012 : 2:46 a.m.
At the same time that the sky is the limit for what the top elite are paid, most of the clerks, technicians, and fine employees who admirably keep the hospital well-running are low-paid, and being asked to do ever more with ever less support and Department funding....
JBK
Mon, Dec 17, 2012 : 2:38 a.m.
Hail hail to Michigan.....the Leaders and best! :)
Kai Petainen
Mon, Dec 17, 2012 : 2:28 a.m.
16 days. in 16 days its a new year. hopefully 2013 will be a good year. it's a great hospital with great people... i hope 2013 brings them good news. you forget... they were also pushing for the multi-million $$ train station....
Kai Petainen
Sun, Dec 16, 2012 : 11:55 p.m.
"In exchange for prosecutors' not charging Dr. Gilman, he has agreed to share information about "any matters" they want to ask him about." wow. that's actually pretty serious.
Kai Petainen
Sun, Dec 16, 2012 : 11:20 p.m.
With regard to networks, stocks and universities -- you might want to check out these 2 articles relating to the University of Texas... Great Timing by Baldwin Investments on FCX and PXP -- Directors Sit at the Same Foundation http://tinyurl.com/cp6r39h "A portfolio manager is a director at a cancer foundation. That cancer foundation is located at the University of Texas Cancer Institute — the #1 ranked Cancer Institute. The investment firm that the portfolio manager works at, holds stock in Freeport (NYSE:FCX) and Plains Exploration (NYSE:PXP). A director of Freeport, is also a director at the same cancer foundation with the portfolio manager. Freeport is currently involved in a deal with PXP. The investment firm sells a large portion of their holding in FCX, and they buy PXP — and PXP is connected to deal at FCX. News comes out. FCX stock falls while PXP stock rises. The investment firm had great timing on the transactions." Cancer Stocks http://tinyurl.com/cmw5lta "A Cancer Center has executives. The executives hold a position at a public company. If the executives form a representation of the Cancer Center, what would that portfolio look like?"
say it plain
Sun, Dec 16, 2012 : 11:04 p.m.
Wow, just wow. This really takes away the "aw, but the sweet ol' man! Maybe he just was duped by the big bad ol' wolves of Wall Street into giving away information he didn't even realize was wrong to give away" argument in his defense being made by some on previous threads about this story. Lol. Yes, now the UM is "reviewing their policies regarding their faculty being consultants". Good idea UM. How about reviewing your policies regarding compensation of employees who conduct large-scale ethics and legal violations, non-prosecution agreements notwithstanding, and all? What a terrible reflection on the UM culture, if they can't completely and resoundingly attempt to distance themselves from someone like this. Ick. It's starting to feel it might be impossible to maintain affiliation with this institution without feeling rather scummy by proximity and association, no?
Nicholas Urfe
Sun, Dec 16, 2012 : 10:33 p.m.
"Gilman, who served as chairman of the safety committee overseeing the trial, entered into a non-prosecution agreement with the Securities and Exchange Commission in exchange for cooperating with the investigation." That should never have been an option.
Ed Kimball
Mon, Dec 17, 2012 : 4:09 p.m.
As GoNavy implied, it was an option because the SEC wants his testimony in order to catch those who made a lot more money on his information than he did. Prosecuting Gilman would probably cause him to take the Fifth Amendment and he wouldn't reveal the information they need to get Cohen and others. Sometimes you have to allow a smaller evil to get by in order to prosecute a bigger one.
GoNavy
Sun, Dec 16, 2012 : 11:10 p.m.
It would have been pretty easy to get Dr. Gilman to fold, in my opinion. He has a lot to lose, both professionally and financially. Then again, the SEC has much bigger fish to fry. In this case, the noose is tightening around Steven A. Cohen and his firm.
justwondering
Sun, Dec 16, 2012 : 9:31 p.m.
Pretty slick to negotiate a non-prosecution agreement. That must have cost a pretty penny, but I guess he has a lot of pennies now, doesn't he?
Goober
Sun, Dec 16, 2012 : 9:31 p.m.
..................and no one at the U-M knew of this? Yeah, right!
SonnyDog09
Mon, Dec 17, 2012 : 5:45 p.m.
"and no one at the U-M knew of this?" Oh, they knew. But no one found it to be unusual. After all, limousines, private jets and five star hotels are part of the perks that come along with the job. You don't think that MSC flies commercial, do you? Or that she drives herself to the airport? Or that she stays at the Holiday Inn?
Goober
Mon, Dec 17, 2012 : 3:04 p.m.
I would venture a guess that the U-M has a policy that various positions much reveal their outside, paying activities to insure there is no conflict of interest.
1bit
Mon, Dec 17, 2012 : 12:21 a.m.
There is no way for the University to know about this type of consulting. The way it works is that he has an outside consulting arrangement and this can be done on his own time (not necessarily at work). Unless U of M were to audit his tax returns (they don't), then they would have no idea what he does separately.
cook1888
Sun, Dec 16, 2012 : 9:25 p.m.
How is this different then what Martha Stewart went to prison for? Why isn't he in jail?
Stan Hyne
Tue, Jan 1, 2013 : 5:08 p.m.
Martha Stewart did not do any thing illegal in stock transactions. Her only crime was lying under oath. Sort of like President Clinton only she didn't have the political backing.
GoNavy
Sun, Dec 16, 2012 : 11:07 p.m.
Martha Stewart perjured herself to federal investigators.
Nicholas Urfe
Sun, Dec 16, 2012 : 10:30 p.m.
Actually, Martha Stewart's actions were arguably a whole lot less criminal and happened in a completely different era. All of which justify greater punishment in this case.
Nicholas Urfe
Sun, Dec 16, 2012 : 10:29 p.m.
It's because Martha Stewart was a woman.
Arieswoman
Sun, Dec 16, 2012 : 9:12 p.m.
Why am I not surprised! Guess he won't be hurting for food on the table.
GoNavy
Sun, Dec 16, 2012 : 8:57 p.m.
This man should face criminal prosecution for sharing the information he did.
blue85
Mon, Dec 17, 2012 : 1:03 a.m.
"Note: I did not realize that Dr. Gilman had negotiated a non-prosecution agreement. Obviously it's because he was facing criminal prosecution." I worked for a hedge fund for the managing partner. When called to testify, even as a witness, he would first demand a global immunization relative to the issues to be discussed. His point: you never give away optionality, especially when you can't forecast when negative optionality might arise (being called as a witness, then later being deposed as a defendant). Dr. Gilman may or may not be facing criminal prosecution, I don't think we can conclude that he is, based on the facts currently in evidence, but competent counsel would/should always ask for immunity. Generally, a grant is based on being able to offer the prosecution leverage, but is more easily obtained if one doesn't have material personal culpability.
GoNavy
Sun, Dec 16, 2012 : 11:08 p.m.
Note: I did not realize that Dr. Gilman had negotiated a non-prosecution agreement. Obviously it's because he was facing criminal prosecution.
GoNavy
Sun, Dec 16, 2012 : 11:06 p.m.
Ya. I spent over ten years - almost half working for various hedge funds. I'm highly familiar with both SAC capital and these so-called "expert networks." In fact, some people would consider me the sort of individual who would be called to testify in one of these cases, due to my professional knowledge and experience. So yes - Dr. Gilman is innocent until proven guilty. However, I have no doubt that he should (and likely will) face criminal prosecution for his actions.
ordmad
Sun, Dec 16, 2012 : 9:47 p.m.
You're right. Best to let someone who reads an article or two on this make the determination as to whether there is criminal liability. Much better than the people trained and experienced in this.
Tom Todd
Sun, Dec 16, 2012 : 8:40 p.m.
White collar professional he leave with a huge parachute package and a medal of honor.
actionjackson
Mon, Dec 17, 2012 : 3:07 a.m.
It will be interesting to hear whether he shared UofM propriety with clients. A loss of pension or benefits would not be cruel and unusual if found guilty. I am a firm believer in his innocence until proven otherwise. Hard to believe that someone wasn't happy with over a quarter million dollar per year income?