Friday, September 23, 2005
Each time a story like this comes out -- and they seem to appear with alarming regularity -- it causes me to wonder whether corporate executives and board members pay any attention to the discussions about how insider trading in the company's stock is illegal. The SEC filed an insider trading suit against Swift Transportation Co. CEO (and former board chairman) Jerry Moyes for buying 187,000 shares of company stock in the two trading days before an announcement that that Swift projected better-than-expected revenues and a stock repurchase program that sent shares up 20%. Moyes had a paper profit of $622,000, not bad for a two-day investment. Once the information about the transactions was disclosed on the Form 4 filed with the SEC, Moyes put the profits from the trades into a trust. The board was apparently asleep at the switch, though, because the SEC's Litigation Release (here) notes that "[u]pon learning of Moyes' trades, Swift's independent directors took corrective action, including implementing a stricter insider trading policy and instituting a pre-clearing process for all trades by company insiders." I can only imagine what Swift's insider trading policy was before this took place. Moyes settled the case by disgorging the profits and paying a one-time penalty; he will step down as CEO in December 2005.
Swift issued a press release (here) touting the fact that the SEC did not take any action against the company related to Moyes' trading, under the following headline: Swift Transportation Co. Inc. Announces Great News from the Securities and Exchange Commission. Welcome news, perhaps, but "great"? (ph)