If Sam Waksal had read Atlas Shrugged, he may have walked free.
In a memorable scene in Atlas Shrugged, Hank Rearden, a self-made steel magnate, sat, like Waksal, in a courtroom, on trial. Rearden, like Waksal, had violated the law.
Rearden’s crime had been to sell four thousand tons of Rearden Metal, his own creation and property, the result of ten years of his arduous labor, to a customer of his choice, in violation of a law that dictated what quantities and to whom he could sell.
Rearden, like Waksal, had “cheated the law” and “broken the national regulations designed to protect the public welfare.” Rearden, like Waksal, was denounced for his “selfish greed,” and for being “prompted by nothing but the profit motive.”
But Rearden, unlike Waksal, was shameless about his motive: “I work for nothing but my own profit. I earn it,” he proudly told the court.
Rearden, in contrast to Waksal, knew he had committed no crime. “I do not recognize my action as a crime,” Rearden told the judges.
When the judge told Rearden, “Your only alternative is to state for the record that you throw yourself upon the mercy of the court,” Rearden answered: “I do not. I will not apologize.”
Waksal apologized profusely–to family, friends, employees, shareholders, cancer victims, society, the universe at large. “I am deeply disturbed and so very sorry for my actions.” “I want to apologize to all the people who may have had confidence in me and whose confidence I betrayed.” “To cancer patients I am so sorry for any delay I might have effected in the approval of Erbitux because of my actions.”
What about the government’s actions? From the cumbersome and bureaucratic process of FDA approval, to the FDA’s initial refusal last year to even review Erbitux’s record, to the subsequent legal persecution of Waksal while he worked to make Erbitux available to the public, it was the government, in all instances, that delayed the use of Erbitux–and almost rejected it.
Rearden realized the government had turned the law on its head–instead of protecting his rights, it denied them. “I will not help you to preserve an appearance of righteousness where rights are not recognized,” he told a stunned courtroom. “I will not help you to pretend that you are administering justice.”
But Waksal did not demand justice–he pleaded for mercy. Unlike Rearden, he failed to understand and assert his innocence.
Waksal didn’t stand a chance.
It should not have been surprising that he was denied both justice and mercy. Yet, like Rearden, he had committed no crime.
A crime, in a proper legal system, is a violation of individual rights. Selling you property–be it a ton of metal or a million shares of your company’s stock–is an exercise, not a violation, of individual rights.
“Insider trading” should not be considered a crime because there is no violation of rights in a voluntary trade or exchange of information between individuals, where no force or fraud are involved. Waksal violated no one’s rights and initiated no force. Waksal simply told his father and daughter that an upcoming FDA ruling would likely decrease the value of their stock. Waksal’s family then sold to avoid the imminent losses. But they commited no crime. They sold to willing buyers and, like any other traders in the stock market, didn’t promise or give guarantees that the value of the shares they sold would not fall.
In a free society what Waksal knew or what the buyers failed to know is none of the government’s business. In a free market, individuals must be free to trade their stocks and property at any time, for any value, for any reason (unless bound otherwise by contract).
Waksal doomed himself because he did not realize that he was morally innocent–although legally guilty. Rearden knew better. Because Rearden was convinced of his moral innocence, he had the courage to stand up to his accusers and refuse to give them what Ayn Rand called the “sanction of the victim.”
“The ‘sanction of the victim,'” explained philosopher Leonard Peikoff, “is the willingness of the good to suffer at the hands of the evil, to accept the role of sacrificial victim for the ‘sin’ of creating values.”
Rearden was unwilling to play such a role. Waksal embraced it. Rearden understood that the court had the legal but not the moral authority to condemn him–and that it might not exercise the former if lacking the latter. Rearden knew that his only chance to walk free was not to grant the court the moral high-ground.
There is no businessman or trader in America who can afford not to learn the lesson from Rearden’s–and Waksal’s–trial. Rearden walked free.
If Waksal had read Ayn Rand, he too may have walked free.
Further Reading:
The SEC’s “Insider Trading” Witch Hunt Against ImClone’s Sam Waksal: Scapegoat for the Sins of the FDA
The FDA obstructed the launch of a product; then the SEC forced the termination of that product’s primary creator. Yet it’s not any regulator but the creator — Sam Waksal — who faces jail time for helping his family mitigate regulatory destructiveness.
