The corporate insiders, including Pfizer chairman William Steere and President Henry McKinnell, filed their intentions with the Securities and Exchange Commission between October 21 and 26, according to First Call/Thomson Financial. On October 25, Steere expressed his interest in forming a strategic transaction with Warner-Lambert through a letter he faxed to its chairman, Lodewijk JR de Vink. Pfizer's board was unaware of the letter at the time, de Vink says Steere told him.

Pfizer announced its offer for Warner-Lambert Thursday, just an hour after Warner-Lambert and American Home Products Corp agreed to a $69 billion friendly merger agreement. Investors balked at the unsolicited offer, sending Pfizer down 3 per cent Thursday; shares of the New York-based company are off about 9 per cent since the bid.

At the time of the filings, Pfizer had yet to reveal its intentions to acquire Warner-Lambert. Securities laws generally don't require companies to disclose any takeover discussions, but they do bar insiders from trading on material information that isn't public. "The general rule in this area is disclosure or abstain from trading," says Joseph Grundfest, Stanford University law and business professor and former commissioner at the Securities and Exchange Commission.

A spokesman for Pfizer says Steere and McKinnell made their transactions on October 21 "Ahead of any knowledge of a merger combination." He says that the proposed sales have been made and that all the insider sales occurred during a window period that begins two days after earnings are released and lasts for 10 days. The sales represented a small percentage reduction in each insider's position in the company and top executives have to hold a certain number of shares to meet the company's stock ownership requirements, the spokesman adds.

The sales come at a time when Pfizer stock is down nearly 30 per cent from its high of $50.042 in April. Andy Summers, an analyst with Invesco Funds Group that holds more than one million shares of Pfizer, is curious why the insiders sold so soon before a coming analyst meeting in New York where Pfizer usually talks about new products in the pipeline.