Big Lots Could Be in Big Trouble
The Securities and Exchange Commission is reportedly probing Steven Fishman, the CEO of discount clothing retailer Big Lots Inc. (NYSE:BIG), over a dubious sale of company stock. Fishman, who coincidentally informed his board on Tuesday that he will be retiring, sold $10 million in stock about one month before a regularly-scheduled filing revealed a slowdown in sales that triggered a 24 percent single-day drop the stock price.
The SEC investigation into Fishman’s trade is just one of several that has made headlines recently. The Wall Street Journal published a report last week examining thousands of trades made by executives and revealed a pattern that suggests the regulatory environment surrounding executive trading of company stock is highly disorganized and presents a lot of gray area that leaves room for shady behavior.
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Fishman is not even the shadiest character in this story. A father-daughter pair, Jerrold Rosenbaum and Beth Angelo of Body Central (NASDAQ:BODY), a specialty retailer of women’s apparel, sold a combined $2.9 million of company stock in the three days immediately preceding an announcement that slashed the company’s 2012 earnings estimate. The news triggered a 48.5 percent decline in the company’s stock price.
The report details other examples of questionable behavior by executives at companies buying and selling their own stock at highly opportune times. A common thread is that most companies involved are relatively small. Body Central has a market capitalization of about $163 million and an average daily trade volume of just 260,794 over the past three months. There are not a lot of people watching these stocks…