According to sources familiar with the matter

Cassava Sciences tanked today due to reports the the SEC was investigating.  Here is a direct quote from the Wall Street Journal  — https://www.wsj.com/articles/cassava-sciences-alzheimers-sec-investigation-11637154199?siteid=yhoof2

“The Securities and Exchange Commission is investigating claims that Cassava Sciences Inc., the sixth-best performing U.S. stock this year, manipulated research results of its experimental Alzheimer’s drug, according to people familiar with the matter.”

This has all the appearances of a plant by the shorts.  Why?

Both my late mother in law and father in law were lifelong employees of the SEC.  He was their chief financial analyst, and she authored the pension study which resulted in them being transferrable when people switched jobs (yes it wasn’t always that way !).  I was amazed to hear from them that the SEC burned or shredded all their trash, because the information about what the SEC was investigating was so valuable (to both longs and shorts).

I’d never heard of the SEC leaking things but apparently it has happened in the past (J. P. Morgan — https://archives.cjr.org/the_kicker/sec_investigation_media_leaks_reuters.php).  How often this happens, I don’t know as I don’t follow the market that much, but this is more than passing strange.

Consider how many times you’ve heard the phrase “persons familiar with the matter” or “anonymous sources” in the past 4 years, and think of how often they’ve turned out to plants and far from true.

Update

Source: https://www.sec.gov/enforce/how-investigations-work.html

How Investigations Work

The Enforcement Division assists the Commission in executing its law enforcement function by recommending the commencement of investigations of securities law violations, by recommending that the Commission bring civil actions in federal court or before an administrative law judge, and by prosecuting these cases on behalf of the Commission. As an adjunct to the SEC’s civil enforcement authority, the Division works closely with law enforcement agencies in the U.S. and around the world to bring criminal cases when appropriate.

The Division obtains evidence of possible violations of the securities laws from many sources, including market surveillance activities, investor tips and complaints, other Divisions and Offices of the SEC, the self-regulatory organizations and other securities industry sources, and media reports.

All SEC investigations are conducted privately.

The SEC is not part of the Justice Department whose policy it is never to disclose an investigation.  It appears that the SEC’s policy is the same, so whatever came out today was very likely not an SEC announcement (and likely a plant by the shorts).

Addendum 18 November:  The Wall Street Journal article on the SEC probe appears on the front page of today’s paper.  The third paragraph is just one sentence. “An  SEC spokeswoman declined to comment.”  The article goes on to talk about the public petition to the FDA filed in August.  The article mentions that David Bredt is a former neuroscience research chief at Johnson and Johnson and Eli Lilly (both of which have developed and are developing Alzheimer’s drugs — something the article fails to mention).

So clearly the article is a hit piece on Cassava.  Would you like to take a guess who the “people familiar with the matter” in the first paragraph are?