Today's WSJ reported the alter ego of the Whole Foods CEO John Mackey who used Yahoo finance forum to trumpet shares of his own company while bashing rivals Wild Oats. He posted his opinion under an pseudonym, only to be revealed by the Federal Trade Commission who tried to enjoin Whole Foods' acquisition of Wild Oats for anti-competitive concern.
It is interesting that an CEO would employ such tactics to attack his rivals, and, as reported, the board of the Whole Foods might have to reconsider the judegement or sanity of the CEO rathern than his possible criniminality.
As a student in media law, I also have an interesting eye on the legal implications of the CEO maverick behavior. It could be related to defamation in media law, or concern security law. Mr. Roger Paloff had a good summarisation of the possible breaches.
called some securities law experts, but they all seemed to think that the problem was a bit broader than that. It’s a control issue, they explained. The CEO is disseminating information that hasn’t been reviewed by either the general counsel or the board. If his comments move the market, he could be engaging in stock manipulation. If anything he says is materially misleading, he’s violating Section 10B of the Securities Exchange Act. If any material nonpublic information slips out, he’s violating Regulation FD, which forbids selective disclosures. If he’s ragging on a competitor’s CEO, he could inadvertently say something defamatory. If there are confidentiality agreements in place, he could be violating them.
So far, what is interesting is that the Wild Oats, attacked by Mackey online, havenot made any response. Neither have the press reported the response of the Wild Oats. But it would be interesting to see what will happen next.
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