So, now I’ll wade into truly shark-infested waters, here. . . . and ask a truly impertinent — provocative — question:
As I noted yesterday, and the call-transcript confirms, Jami Rubin of Morgan Stanley was essentially told by Fred Hassan that “no models” exist for what is happening with the Vyotrin/Zetia Joint Venture.
However, Jami had also asked these questions on the Merck call (Merck transcripts, courtesy seeking alpha), only two days earlier, and heard a very different story — the truth, apparently — told to her.
So, why wouldn’t she be writing — and writing furiously — about not being told the entire truth by Fred Hassan, yesterday? And, mind you now, this is no small matter: this is still over 55 percent of all of Schering-Plough’s 2008 profitability, at stake here. Why wouldn’t she?
Well, the SEC only requires, via Regulation AC, that all analyst- reports accurately reflect the genuinely-held personal views of the author. The SEC rules do not require that Morgan Stanley analysts certify actual “independence” of any sort.
And so, Morgan Stanley analysts are free, under the applicable rules, to take into account their own firm’s interests1 in deciding what to write — or not write — about.
Interestingly, for his part, Merck & Co. CEO Richard T. Clark entered his own “confessional” about the relative-opacity, and self-interestedness [or, if you prefer, the conflicted interests] of the United States pharmaceutical sector (H/T Ed, at pharmalot.com).
“Hey! — maybe Jami could profile Merck & Co.’s emerging views on this matter.”
[Cue the crickets. . . . chirping. . . . chirping into a deafening silence.]
[Footnote 1: Morgan Stanley clients (purchasers of the Schering-Plough securities offered in August and September of 2007) had, at issuance, at least $626.68 million of exposure to Schering-Plough risks, courtesy of their Morgan-Stanley advised purchases, in August and September of 2007, alone. I’ll not bother to calculate the amount of market-decline in those aggregated holdings, with any real precision — suffice it to say that perhaps only 60 percent of the dollar-converted amounts of those net positions still exist, as of this writing.
In addition, Morgan Stanley affiliates earned a minimum of $14.53 million in commissions from Schering-Plough public stock and bond offerings, in the second half of 2007, alone.
I hope this gives the readership some stimulating food for thought.]