Tuesday, January 25, 2005
Travelzoo Inc., an internet company that promotes travel bargains for other company's on its website, filed a Form 8-K (here) with the SEC disclosing that the Commission has requested information from the company regarding trades by CEO Ralph Bartel, who owns 80% of the company's outstanding shares. The stock has been the subject of significant short selling, and the shares dropped over 20% on Travelzoo's disclosure of the informal inquiry by the SEC. The Form 8-K states:
Travelzoo Inc. has provided information to the Securities and Exchange Commission in connection with an inquiry into trading in its shares. The inquiry follows a period of extreme volatility in the company's stock price on the NASDAQ Stock Market during 2004, which has also been a cause of concern to the company.
In response to this inquiry, Travelzoo Inc. has provided information concerning any transactions in the company's shares by its officers, directors and employees, including Ralph Bartel, the company's CEO. The results of the company's review showed that, during the period in question, when the price of the company's shares increased dramatically, neither Mr. Bartel nor any other directors or senior officers of the company purchased any shares, except for one exercise of a stock option. The inquiry also asked for additional information from Mr. Bartel. Mr. Bartel has confirmed that, since his last sale of 50,000 shares in May 2004, at $19.96 per share, he has neither purchased nor sold any of his shares, except for a previously reported sale of 30,000 shares in November 2004, which Mr. Bartel was required to sell under a stock warrant issued in 2003, which allowed the holder to purchase those shares from Mr. Bartel at $3.90 per share.
The company has provided all information which has been requested to date in this inquiry. The company has no reason to believe that the inquiry relates in any way to the financial reporting or operations of the company.
The impetus for the SEC's inquiry may well be the short sellers who are betting on a decline in Travelzoo's stock price. The last sentence is small comfort to the public shareholders when the SEC probes market manipulation.(ph)