Michael Astrue, President Bush's nominee to become the next Commissioner of Social Security, was employed from 2000 to 2005 by Transkaryotic Therapies, a company that developed biotech pharmaceuticals, first as Vice President and Legal Counsel and later as CEO. The circumstances surrounding his elevation to CEO of Transkaryotic are explained a bit in this article from Forbes.com of September 2, 2005, which may also explain why at least one person probably thinks Astrue should not be confirmed as Commissioner of Social Security:
Exactly what Dr. Selden did, when he did it and why are probably much more murky than this article indicates. If it were this simple, Selden would probably be facing criminal charges. Of course, Selden is trying to save his own skin and may say anything, so we should not take his statements too seriously. No one other than Selden is accusing Astrue of doing anything improper. Maybe other attorneys within TKT or at an outside law firm were advising Selden on SEC matters. For all we know, the key incidents in this case happened suddenly without Astrue's prior knowlege. Perhaps, Astrue bluntly warned Selden and the TKT board of directors about what was happening and they ignored him. We do know that TKT's board of directors selected Astrue to replace Dr. Selden as CEO after this happened, which strongly suggests that they did not blame Astrue for what happened. Astrue was selected for several boards of directors and became an interim CEO after this happened. All of this suggests that within the Boston biotech community that Astrue was not blamed for what happened.
Despite all of the signs that no one other than Dr. Selden blames Astrue for what happened, it remains a fact that what appears to have been a preventable legal problem happened on Astrue's watch and that the legal problem nearly destroyed his company. The legal problem has certainly destroyed the career of the CEO who was Astrue's primary client. The SEC charges against Dr. Selden have not been resolved, as best I can tell, meaning that this matter could come back to haunt Astrue. The FBI must have investigated Astrue before this nomination was announced. Astrue's role in the Selden debacle had to have come up during the investigation, so the Senators considering Astrue's nomination should have access to much more information about this matter than is available on the public record. There are legitimate questions to ask Michael Astrue about what happened at TKT. That there may be good answers for these questions is no reason not to ask them.
There are good doctors and mediocre doctors. But according to the U.S. SEC, Dr. Richard Selden is in a class by himself. Selden, the former chief executive of Transkaryotic Therapies (TKT) [where Michael Astrue, the nominee to become Commissioner of Social Security, used to work], was charged by the SEC with allegedly hoodwinking investors about failed drug trials to artificially inflate the stock price--then selling off his own shares. According to the civil complaint filed Thursday by the SEC, Selden sent positive press releases even after the U.S. Food and Drug Administration had said in 2001 that trials of TKT's company's flagship drug Replagal, had failed.Who were these TKT lawyers whom Dr. Selden alleges advised him wrongly? Michael Astrue was TKT's Legal Counsel at the time, so he is almost certainly one of them. On the face of it, we have a simple situation. Astrue was the chief legal officer at TKT. He was responsible for making sure that the company stayed in compliance with SEC rules. His CEO apparently violated SEC rules in a spectacular way that nearly destroys the company. Why did Astrue not prevent this? Is he in some way culpable for what happened?
By selling his shares before disclosing the negative data about Replagal, Selden "unjustly enriched" himself by $1.66 million, the SEC alleged in the complaint filed in U.S. District Court in Boston. The agency is seeking that money along with the $1.1 million in salary and bonuses Selden earned in 2001 and 2002. According to an Associated Press report, Selden in 2001 sold 90,000 shares of TKT stock--well before Oct. 3, 2002, when TKT finally disclosed the problems with its FDA application. The next day, its shares plunged 61%, to $12.75.
Through his attorney Thomas J. Dougherty, Selden maintained TKT lawyers, who advised him wrongly, bore responsibility for his actions. "He deserves and expects to prevail at any trial of the issues," Dougherty told The Boston Globe.
Exactly what Dr. Selden did, when he did it and why are probably much more murky than this article indicates. If it were this simple, Selden would probably be facing criminal charges. Of course, Selden is trying to save his own skin and may say anything, so we should not take his statements too seriously. No one other than Selden is accusing Astrue of doing anything improper. Maybe other attorneys within TKT or at an outside law firm were advising Selden on SEC matters. For all we know, the key incidents in this case happened suddenly without Astrue's prior knowlege. Perhaps, Astrue bluntly warned Selden and the TKT board of directors about what was happening and they ignored him. We do know that TKT's board of directors selected Astrue to replace Dr. Selden as CEO after this happened, which strongly suggests that they did not blame Astrue for what happened. Astrue was selected for several boards of directors and became an interim CEO after this happened. All of this suggests that within the Boston biotech community that Astrue was not blamed for what happened.
Despite all of the signs that no one other than Dr. Selden blames Astrue for what happened, it remains a fact that what appears to have been a preventable legal problem happened on Astrue's watch and that the legal problem nearly destroyed his company. The legal problem has certainly destroyed the career of the CEO who was Astrue's primary client. The SEC charges against Dr. Selden have not been resolved, as best I can tell, meaning that this matter could come back to haunt Astrue. The FBI must have investigated Astrue before this nomination was announced. Astrue's role in the Selden debacle had to have come up during the investigation, so the Senators considering Astrue's nomination should have access to much more information about this matter than is available on the public record. There are legitimate questions to ask Michael Astrue about what happened at TKT. That there may be good answers for these questions is no reason not to ask them.
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