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The founder and former CEO of drugmaker ImClone Systems, Sam Waksal,
reported to prison yesterday to begin a 7-year term. Mr. Waksal was
convicted of insider trading, and received this sentence last month in a
federal court. Mr. Waksal tipped his daughter off in December of 2001 that
the FDA was going to turn down the drugmaker's application for a
cancer-fighting drug called Erbitux, a decision the FDA has since reversed.
As often happens when a drug company receives denials from Big Brother (I
mean, the FDA), the stock plummeted, and investors lost oodles of money.
Mr. Waksal's daughter, on the other hand, was safely free from the market
price decline, as she had sold her shares in advance of the public
pronouncement. If this whole case sounds a tad familiar, it is because
Martha Stewart is all tied up in this mess as well, having been accused by
lawmakers of also selling her shares due to the receipt of insider
information (she has yet to stand trial).
As much as I'd like to, the purpose of my comments today is not to defend or
argue against the legality vs. illegality of insider trading. Renowned
economist and freedom-lover, Milton Friedman, makes some very compelling
arguments against legislation barring the activity, but I will save that
discussion for another day. My question today is: Even if we accept the
validity of these lies, and even if we think Mr. Waksal is a terrible man
for telling his daughter she was about to lose millions of dollars, does
anyone out there really feel safer today than they did yesterday because Sam
Waksal is in prison? Frankly, I think it is one of the most ridiculous
things I have ever heard.
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Indeed, a crime was committed (if only by virtue of our current statutory
laws), and Mr. Waksal ought to be punished. But if he is accused of a
financial crime, why would restitution to his victims not make more sense
than putting a completely non-violent offender in a federal prison at the
expense of us taxpayers? If he stole money from an unknowing victim, why
not make the man pay the victim(s) back, and then some? Why should he be
subject to the same punishment we give to rapists and kidnappers? Does this
not seem a little bizarre? Seeing the media and the public roll around in
glee at the sight of an accomplished scientist and businessman was a bit
much for me yesterday.
Reality is that we take glee in seeing a person like Sam Waksal go to
prison not because we love justice (this punishment does not fit the crime),
but because we are envious and jealous of his successes, we are bitter at
our own financial losses, and we need a scapegoat to put the blame on.
This man may very well be a terrible person – I truthfully don't know (as an
aside, prosecutors attempted to "beef" up the indictment against him by
throwing in the fact that he also stepped around sales tax on some paintings
he bought - a charge that added no further negative feelings against
him by me than if someone had told me that red was his favorite color).
But no matter how negative our feelings might be of someone like this, there
is no rational reason to place him in prison, let alone to take glee in
seeing him go to prison. His punishment, if there is to be one, ought to be
one that fits the crime. It ought to involve restitution, painful
restitution, heavy restitution, maybe even regulatory suspension or
expulsion. But not prison. As soon as we go down that path, we open
ourselves up to the incarceration of people for an awful lot of reasons that
lack justification – at least in a just and fair society.
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