Thursday, July 12, 2007
The big story today is the illicit postings made over a period of seven years by Whole Foods CEO and co-founder John Mackey on the Yahoo chat board for Wild Oats. Apparently, he used the handle Rahodeb (his wife Deborah's name backwards) to make posts bad-mouthing Wild Oats and talking up Whole Foods. You can't make this stuff up. I haven't read all of the posts, but Mackey as CEO of Whole Foods has potential liability exposure under the anti-fraud provisions of the Exchange Act for the postings. To defend himself against these claims, he will likely claim that, among other things, the posts come under the puffery exception and otherwise it would have been unreasonable to rely upon them. Fair enough -- these days it may be patently unreasonable for anyone to rely on a chat board posting for their trades.
In the end, the Whole Foods-Wild Oats saga highlights for attorneys the problems of head-strong clients/CEOs who likely do not take advice well, as well as the perils of second requests. But just because you have a dumb CEO still doesn't justify the FTC actions here challenging Whole Foods' proposed acquisition of Wild Oats. As far as I know, there is no stupidity provision in the antitrust laws though some may argue there should be one in the law generally.
Addendum: read the posts here.