Financial Services and General Government Appropriations Act, 2017

Floor Speech

BREAK IN TRANSCRIPT

Mr. DUFFY. Mr. Chairman, first, I want to thank Chairman Crenshaw for yielding and engaging in this colloquy and for all his hard work on the Appropriations Committee, and specifically on Financial Services, as he navigates this last, final bill through the House floor. We are all grateful for his hard work.

Mr. Chair, the amendment I was planning on offering tonight is related to my concerns with the potential market abuse surrounding the shorting of the stocks of small pharmaceutical companies. I am concerned about a new tactic by some market participants.

There has been recent reporting in The Wall Street Journal and in the Financial Times that reveals a deceptive and manipulative practice by some hedge funds to challenge the legitimacy of a drug patent while simultaneously shorting the drug manufacturer's stock. These particular hedge funds game the system. What they do is short the stock. Then they publicize numerous patent challenges and provoke fear in the marketplace, drive down prices, and make a lot of money.

I think this warrants further examination by the SEC's Division of Enforcement for potential violations of security law. I also believe the SEC should consider enhancing the disclosure regime for short positions. Increased transparency, Mr. Chair, could help combat these types of attacks.

This is not just an issue of investigating the legality of the practice; it is also about the impact this practice has on the market and, more importantly, on the millions of Americans who need these treatments. This affects Members of Congress, their staffs, their families, and people back home in their districts. We are talking about lifesaving drugs.

The pharmaceutical industry, due to its unique relationship with its Federal regulator and the extraordinary time and upfront investment it takes to bring a drug to market, is particularly vulnerable to this kind of attack. Biotech companies rely heavily on their patents. An attack that is designed to undercut a company's patents and drive down its stock will, ultimately, discourage long-term investment in innovation and slow drug development. Worse, it could derail the development of the next lifesaving cure for the people whom Members know in their families or in their districts.

I appreciate Chairman Crenshaw's engaging in this colloquy. Hopefully, the gentleman will give great consideration to this issue.

BREAK IN TRANSCRIPT

Source