ABC's medical correspondent made a quick $53,000 on a public stock offering in a medical Web site--and now must give the money back.
Nancy Snyderman, a physician who appears on "Good Morning America" and "20/20," and her husband ran afoul of federal securities rules by selling too quickly some shares in Drkoop.com, the Internet site launched by former surgeon general C. Everett Koop.
The Austin-based company acknowledged yesterday that Snyderman had violated insider-trading rules by flipping part of her stock shortly after the company's initial public offering, or IPO, in June. Drkoop.com employs Snyderman as a director and columnist and, it turns out, is the exclusive provider of health information for the ABC News Web site. Snyderman's sale was first disclosed by the Wall Street Journal.
"Anything of this nature would be considered embarrassing but very unfortunate," said Sue Georgen-Saad, chief financial officer of Drkoop.com. "We want everyone to realize we are filing all the forms and rectifying it as quickly as possible, and so is Dr. Snyderman and her husband. . . . This is a violation that both the company and Nancy take very seriously."
Snyderman's dealings are the second such controversy involving a journalist and Internet stock in recent weeks. The San Jose Mercury News abolished the column of writer Chris Nolan after she made a $9,000 profit in an IPO by Autoweb.com with 500 shares made available by a friend who runs the company.
Internet IPOs can provide easy money for company employees and favored insiders because the initial stock price often skyrockets on the first day of trading, yielding a windfall for the earliest stockholders. But corporate officers are required under federal rules to hold their shares for a minimum of six months.
In Snyderman's case, she was given 367,500 shares as a director of the company. According to Georgen-Saad, Snyderman directed that her husband be allowed to buy an additional 1,650 of the shares made available to friends and insiders.
Snyderman's husband bought those shares at $9 on June 8. He sold the shares through a broker at $41.27 on July 6. That day, Drkoop.com stock jumped 56 percent after the company announced that it was teaming up with Dulles-based America Online Inc.
Snyderman could not be reached yesterday, but according to Georgen-Saad, she maintains that her husband placed the order to sell the shares without her knowledge. When they discovered they had violated Securities and Exchange Commission rules, which treat a couple as a single unit, they notified the authorities.
SEC spokesman Chris Ullman said it is up to the companies involved to enforce the rule against insider selling in less than six months.
ABC spokeswoman Eileen Murphy would not discuss the network's policy about staffers serving on outside corporate boards. But, she said, "we are not aware of any situation where this relationship or holding of stock has influenced her job as a reporter here. If there were some sort of bias in her reporting, that would be an issue for us. This is a personal financial situation that she seems to have rectified immediately."
Lou Dobbs recently quit as president of CNN-fn after he and the network agreed that he could not simultaneously launch a Web site called Space.com.
A 12-year veteran of ABC, Snyderman has a busy schedule. In addition to her television appearances and her "Ask Dr. Nancy" column for Drkoop.com, she writes a column for Good Housekeeping and is an associate clinical professor at California Pacific Medical Center and the University of California at San Francisco.