Insider Trading by Whole Foods CEO??? 50,000 shares sold days before editorial

[cbdo2007]

Here's something we can peg Whole Foods CEO John Mackey for:

http://moneycentral.msn.com/investor/invsub/insider/trans.asp?Symbol=WFMI

Sold 50,000 shares of WFMI for $1.39 Million on 8/6/09. His Editorial appeared in the WSJ on 8/11/09. Sure, he still as 1 Million + shares remaining but selling 50,000 isn't going to raise any alarms and that's a good amount of money to weather a storm with if need be.

Surely he would have submitted his final draft to WSJ prior to 8/6/09 and he would have received some major feedback from them on what the reaction may be.

What may even be more telling is that the co-President of Whole Foods, Walter Robb, sold 8,333 shares on the same day, 8/6/09. This wouldn't be significant and is definitely less than Mackey's take, except for that this accounts for nearly 1/5th of his total number of shares.

Also a VP at the company unloaded 5,000 shares that same day. Good ole' boys club at Whole Foods? These guys knew there may be a fallout brewing and if the stock price goes down because of this, these sales will be very telling.

[ParkieDem]

1. Doubtful.

These were probably planned sales, anyway.

In order for it to be criminal "insider trading," the insider must have "material, non-public information" about the company and trade on that information. I seriously doubt that an upcoming CEO editorial would be material, unless it represents a major, major shift in the company's business.

These sales probably came during a "blackout window," which is a set period of time in which insiders may make trades, because the company makes sure no major announcements are imminent. Robb made a similar sale back in December, as did some other officers. It's really not uncommon for officers to sell shares in this manner. Plus, it's been over a week since the editorial, and there hasn't been a drop in WFMI stock, so these sellers really didn't avoid any losses by making these trades.

[JuniperLea]

3. Well said...

Any fines would be tied to gain/loss... no gain/loss, how do you fine?

"Material, non-public information" is key.

[cbdo2007]

5. The losses haven't happened yet, but he didn't know how quickly or slowly they would.

Surely the bad publicity and boycott will lead to some financial losses and more bad press, which will in turn play on the stock price in the coming months. They must have anticipated some fallout from this, Mackey has never sold a significant number of shares and he follows the stock movements closely. The fallout is only beginning and picking up major steam...

[mod mom]

4. Needs more scrutiny because Mackey has a history of stock manipulation:

Whole Foods CEO Sows Wild Oats
by MATTHEW BLAKE

August 28, 2007


The August 16 federal district court ruling that allowed Whole Foods Market to acquire Wild Oats Market--which withstood appeal the following week--should come as no surprise. The Bush-era Federal Trade Commission has successfully stopped exactly one merger. The deal is still not technically done, as an FTC administrative law judge, separate from FTC antitrust lawyers, could still conceivably rule against the merger (at which point Whole Foods would then be the party issuing an appeal). But the core legal question of whether Whole Foods would monopolize the choices of fancy organic grocery-store shoppers was not what drew attention beyond Wall Street. What really grabbed the headlines was the bizarre, pseudonymous philosophizing of Whole Foods CEO John Mackey--and his rather conventional commitment to the bottom line, which belies the groovy, feel-good vibes pumped out from the company's PR machine.

Wide public interest in the planned merger was piqued in July when antitrust investigators discovered that for seven years Mackey had been posting comments on the Yahoo Finance Bulletin Board chat room under the name "Rahodeb" (an anagram of Deborah, his wife) that promoted himself and Whole Foods and frequently ridiculed Wild Oats. The Securities and Exchange Commission as well as the Whole Foods board has launched an investigation of the chat-room barbs. Mackey used the pseudonym to tell the world he had a cute haircut and that Whole Foods shoppers had outrageously cool tattoos and piercings. More pertinent to the proposed merger, "Rahodeb" had a habit of belittling Wild Oats whenever its stock rose. "Whole Foods says they will open 25 stores in OATS territories in the next 2 years," Mackey-as-Rahodeb wrote after a March 2006 Wild Oats stock jump. "The end game is now underway for OATS.... Whole Foods is systematically destroying their viability as a business--market by market, city by city."

Such comic-book malevolence exposed the megalomania of a CEO who had cultivated a maverick image. Mackey likes to tell reporters he is no longer interested in making money, and he frequently quotes Charles Darwin, Samuel Beckett and even the Talking Heads. Now, disgusted at the pseudonymous postings, many Whole Foods shareholders want him to leave the company or, at the very least, resign his second job as board chairman. "The legal questions are pretty hazy, but it's bizarre behavior at the minimum," says Mike Garland, whose Change to Win Investment Group has invested some of its members' pension funds in Whole Foods stock. "He spent hours of company time on these chat boards." The SEC will determine whether Mackey committed fraud. James Cox, a securities law professor at Duke University, told the San Francisco Chronicle that Mackey would most likely be charged with omitting material facts by obscuring his identity. He added that the SEC could make an example of him to deter other blogging CEOs from surreptitiously manipulating stock information.

-snip

http://www.thenation.com/doc/20070910/blake

[endarkenment]

2. Mackey is a disturbing individual

Although he was cleared of charges, his online efforts to disparage Wild Oats while in the midst of a takeover bid were, to put it mildly, ethically challenged.