Apparently, a CEO posting information on message boards under a pseudonym that may affect the stock price of his company or that of a rival company that his firm hopes to acquire is something that regulators frown on. Who knew?
Recent revelations about the conduct of Whole Foods chief executive John Mackey on an Internet message board are raising a question once unthinkable: Has the founder of the organic food grocery damaged his ability to lead the company?
Antitrust expert Darren Bush, a University of Houston professor, said Mackey is now his "own worst enemy," and that his Internet message board comments under the name of "rahodeb" could undercut the proposed $565 million takeover of rival grocer Wild Oats Markets Inc."CEOs of public companies should not post on message boards, through aliases or otherwise," said John R. Fahy, a securities law expert with Whitaker Chalk of Fort Worth and a former SEC enforcement attorney. "Beyond the business concerns, there are a host of securities law issues" involving disclosure of information.
Late Friday, The Wall Street Journal, citing anonymous sources, said that the Securities and Exchange Commission has started an informal inquiry into Mackey's conduct, asking for more information to determine whether any laws were violated. Whole Foods spokeswoman Kate Lowery said the company had not been contacted by the SEC.
An inquiry would likely center on the timing of Mackey's financial comments on the message board, and whether they contradicted what the company previously said or were overly optimistic about the company's performance.
This tidbit is rather astonishing to me:
Last week, the FTC filed a longer version of its initial complaint, accusing Mackey of trying to eliminate Wild Oats store by store and eventually deciding to buy the company.
In a footnote to the document, the FTC revealed that Mackey sometimes used the name rahodeb on Internet message boards. The information was provided to the FTC by Whole Foods as part of a request for documents relating to the proposed acquisition.
The documents, released Tuesday, led to revelations that Mackey spent eight years participating in the Yahoo finance message boards, posting more than a 1,300 comments over eight years, sometimes as many as 17 times a day.
Anyways. I suspect we're a long way from hearing the end of this. Virginia DeBolt has more.Posted by Charles Kuffner on July 15, 2007 to Bidness