Executives' Stock Selling Move Smells Fishy
Top companies have sold after good guidance, but before bad, 755 times
By Kevin Spak, Newser User
Posted Nov 15, 2013 12:35 PM CST
A man uses his cell phone in front of chart with the stock prices at the Greek Stock Exchange in Athens, Oct. 4. 2011.   (AP Photo/Thanassis Stavrakis)

(Newser) – The next time you see a top executive deliver good news and then sell stock in his own company, head for the exits. Executives have an uncanny knack for issuing positive guidance, selling their stock, and then issuing negative guidance soon thereafter, the Wall Street Journal reports. The Journal found 1,468 cases since 2005 in which a public company issued positive, then negative guidance within 120 days, and in 755 of those cases, company insiders sold stock sometime between the good news and the bad news.

Did those insiders know the bad news was coming and mislead investors? It's impossible to say in most cases, but some look mighty suspicious. Investors have actually filed a lawsuit against Novatel, after finding an email in which its then-CEO warned managers that a major client was leaving and that sales would take a hit—which was sent just a few months before Novatel announced that it would beat expectations; shortly after that, the then-CEO sold $3.3 million of his stock. For more eyebrow-raising examples, see the source.

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Showing 3 of 31 comments
savdavis
Nov 17, 2013 8:20 PM CST
DOES ANYONE BELIEVE KENNY BOY IS DEAD....KEN LAY ---OLE GEORGE W.'S FRIEND
FarmerMichael
Nov 16, 2013 2:02 AM CST
This is news? Ken Lay did it before his scam firm (Enron) hit the fan, trying to rally support all the time he was selling. And the Wall Street Journal just notices this? What's fishier? The reporting or the insiders?
SPHeroid
Nov 15, 2013 7:36 PM CST
This question has always bothered me:...... How many millions (billions?) does a person need?..... I'd settle for one.....