Legal and Ethical Issues Raised by Consulting with the Investment Industry
Serious legal and ethical issues may arise when an ophthalmologist who is an investigator in a clinical trial or a member of a data safety monitoring board consults with a representative of the investment industry about an ongoing study.
First, providing information to the investment industry regarding the results of a clinical trial or even your general impressions of how a clinical trial is proceeding will, in many instances, be a breach of your clinical trial agreement, making you vulnerable to a breach of contract claim and liable for any damages caused by your breach. You also could be terminated from participation in the clinical trial. As a practical matter, clinical trial
sponsors may avoid your participation in future trials.
Second, providing information to the investment industry might violate state and federal statutes and regulations that prohibit insider trading, even if you do not buy or sell any securities. If you provide a “tip” of confidential, non-public information that is material to the purchase or sale of securities, you are at risk. Please note that you are at risk whether or not you are compensated for your discussion with a representative of the investment industry. If you are being compensated, that increases the risk, especially with respect to insider trading issues.
Violations of the insider trading laws may result in significant monetary and/or criminal penalties. Senator Charles E. Grassley (R-Iowa), Chairman of the Senate Committee on Finance, asked the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) to investigate conduct that he said “violates a trust that is fundamental to the integrity of both scientific research and our financial markets.”
You may not think that you are providing confidential information when you speak with representatives of the investment industry. However, responses to seemingly innocent questions may allow hedge funds and other investors to make significant trades in advance of FDA approval or disapproval of a new drug application.
Finally, Academy members should consider all of their consulting arrangements in light of Rules 11 and 15 of the Code of Ethics, which provide:
11. Commercial Relationships. An ophthalmologist's clinical judgment and practice must not be affected by economic interest in, commitment to, or benefit from professionally-related commercial enterprises.
15. Conflict of Interest. A conflict of interest exists when professional judgment concerning the well-being of the patient has a reasonable chance of being influenced by other interests of the provider. Disclosure of a conflict of interest is required in communications to patients, the public, and colleagues.
Code of Ethics, American Academy of Ophthalmology
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Revised by Legal Counsel – June 2013