Ann: Management Update, page-13

I remain wary of this lot's governance standards but I think in this case the dude is on the right track. Applying the benefit of the doubt and occam's razor to what happened between the announcement on 27 March and the announcement yesterday I think it may have been a genuine and well-intended mistake by the new CEO in buying the 500,000 EIQ shares after he became aware of the reader study results but before those results were released to the market. When the board became aware of the purchase (which was before the release of the 27 March announcement as the release of that announcement was approved by the board) and that the purchase may be against the company's trading policy and possibly insider trading rules (which must have been after the 27 March announcement was released) I guess remedies were required. My hunch is the remedies were for the CEO to step down and to sell off the shares he had bought on-market without regard for profit or loss (it is one thing to insider trade, it is another to profit from that trading). So in this instance it could well be that all concerned acted appropriately.

As an aside it is not always a hanging offence to engage in what is effectively insider trading. One of the non-executive directors at Spartan Resources recently put his hand up for a blatant breach but apparently got away with it by blaming someone else. The money of mine lads got all huffy that no further steps were thought necessary.

The key takeaway for me in this disappointing episode is that the CEO saw the reader study results go for statistical analysis and was encouraged enough as to put $50k or so of his own coin into EIQ shares. A sane person would not do that unless they thought that the pathway ahead through the FDA process is looking promising. Even without the now ex-CEO's actions the delivery of the results and the imminent application to the FDA are pretty strong green lights for me.