Jim Dimowitz worked as an executive officer for Drughum, Inc., a medium sized US

Question

Jim Dimowitz worked as an executive officer for Drughum, Inc., a medium sized US drug company recently registered on the New York Stock Exchange, trading at $4 a share. He believed that the stock could rise to over $10 a share if the public only knew that Drughum was working to get its new diabetes medicine registered in China, when the diabetes rate was higher than in the U.S., but the company had not yet made that information public, since it was uncertain when and if the Chinese FDA would approve the drug for sale in China. Jim purchased 10,000 shares of Drughum, Inc. on the open market and that purchase was properly disclosed in an SEC filing. As the Senior Vice President for Sales, Jim got the assignment of making sure that the new drug was registered in China. He was excited about this and made sure that all of his 10,000 or so friends on Facebook knew about this assignment and his personal expectations of high hopes for great sales once he managed to get the drug approved. On a trip to China, he learned that Drugham’s local employees in China had hired a consultant to help with the registration process. The consultant’s fee for the work was $50,000, but when he reviewed the contract, he noticed that there was bonus clause that provided for a bonus of $200,000 if the consultant was successful in getting the drug registered within 6 months. Jim knew that the Chinese FDA used essentially the same process as the US FDA for approving new drugs, so he wondered how it was possible to get through 4 phases of testing in less than 6 months. The local VP winked and said “anything is possible with the right grease.” Meanwhile, Jim noticed that the stock price for Drugham had increased from $4 a share to over $7 a share and seemed to be continuing up. You are a friend of Jim’s who just finished a course in business law and Jim calls you and tell you all of the above and says he’s a little concerned and asks what you think. What legal issues does Jim have to be worried about and what kind of lawyers should he be looking for? (This question qualifies for up to 5 bonus points if answered correctly)

Explanation / Answer

Legally Jim have to face issues on the following reasons

Thus he should consult an advocate with contract agreement practise that too with MNC's.

Legally he has to be safe through the activities he has done so far, but cannot justify the consulting work in China if he proceed to fulfil before six months through some illegal or parallel way.

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