Did Green Mountain Know What Starbucks Was Brewing?

The chairman of Green Mountain Coffee Roasters (NASDAQ:GMCR) may be in insider trading trouble. Robert P. Stiller, who also founded the Vermont-based coffee chain in 1981, sold $66.3 million worth of shares days before Starbucks (NASDAQ:SBUX) introduced a new machine that caused Green Mountain stocks to fall.

Stiller sold 1 million shares in two installments on February 15 and 24. On March 8, Starbucks announced the launch of the Verismo brewer to compete with Green Mountain’s K-Cup system. Green Mountain shares fell 16 percent on the news. Had Stiller sold after the news was made public, he would have received $13.7 million less than he did. Stiller reduced his stake in the company by 6.9 percent.

“It’s something that the Securities and Exchange Commission would want to look at,” James D. Cox, a securities law professor at Duke University, told Bloomberg. “If he has inside information, he has to withdraw from the market.”

Green Mountain’s regulatory filing with the Securities and Exchange Commission on March 9 talked of having known about Starbucks’ plan before it was made public, but a spokesman would not clarify the exact date.

Green Mountain’s patent K- Cups have dominated the single-serve coffee making industry for years, but expired in September, and other companies have since developed competing machines. Starbucks had an agreement to use Green Mountain’s system and will continue to do so in addition to using its own Verismo, it announced last week.

Stiller is still the largest individual shareholder in Green Mountain and owns 13.4 million shares, or roughly 8.7 percent of all outstanding shares. He is also the second-biggest shareholder in Krispy Kreme Doughnuts (NYSE:KKD).

To contact the reporter on this story: Aabha Rathee at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com