Posted on 09/19/2004 9:59:45 AM PDT by Steven W.
At the height of Rathergate, it appears Sumner Redstone, Chairman and CEO of Viacom Corporation, has issued his first verdict on the collapse of credibility for its CBS News operation and 60 Minutes programming. In disclosure mandated by the SEC, "STATEMENT OF CHANGES OF BENEFICIAL OWNERSHIP OF SECURITIES", Redstone reveals his transaction promptly followed the disasterous & defiant appearance by Dan Rather on last Monday evening's edition of the CBS Evening News. In official filing, and with Viacom currently selling near 5 year lows, records reveal Redstone sold 341,500 shares of Viacom stock options for an otherwise undisclosed 401K account on Tuesday of last week, September 14, 2004. Overall, with shares still selling for $11,952,500 at only $35 a share, his gross profit from the transaction appears to have yielded around $6,744,625 in cash.
Dumping stock by a CEO during a crisis like this is prima facie evidence of insider trading.
Ohhhhh, I don't know about that: If CBS's official position is that everything is fine and that they stand behind the story, dumping shares might be very very questionable.
There are plenty of examples where public information points to trouble, companies SAY they are fine, execs bail out, and THEN the s--- hits the fan. Like Charlie Wang at CA.
Sumner may have some 'splaining to do.
Watch the selloff tomorrow.
Here's the SEC report
http://www.sec.gov/Archives/edgar/data/813828/000081382804000150/xslF345X02/red370.xml
That is true but not fully relevant in the following respects; they (the execs) typically plan ahead for things like this by filing their papers indicating their intent to sell early on, knowing that, then, something's available to dump if & when the time arises. I too don't believe this would qualify as insider trading because he's reacting to public reports while his CBS insiders try and convince him & everybody that their story is true. The only way insider trading would apply in this case IMO would be if, internally, admissions & recognition were that the story was false and they were conspiring to mislead the public and investors. In this case and think Rather, Mapes et. al. are still lying to themselves as well as everybody else, including Redstone, but he came to another conclusion by himself. The next quarterly filing must loom large for Redstone with the mandates of new corporate finance regulations & Redstone is going to have to assure all the facts & other warnings are disclosed properly as he'll have to sign the bottom line, lest he then get the SEC after his tail. I would imagine just the apparent impropriety of it all won't stop the likes of trial lawyers to pursue a class action shareholder lawsuit regardless (simply because that's what they do). Maybe that's why John Edwards can't be found on the campaign trail ... he's readying his next big gig following the election ROFLMAO
The image of Redstone in a dress and bonnet trying to scramble onto the lifeboat ahead of the "little people" would be funny if it weren't pathetic.
Yes they do
What made him wait 'til Tuesday?
I only state this because we always monitor stock sales for our company. Our execs do the same thing for different reasons, being that our stock values are sometimes driven by the performance of the two larger competitors.
A dip in value means they sell, buy back and buy another private golf course or helicopter with the profit they generate.
exactly why it's so perplexing to see him selling like this at this time; with stock near 5 year lows and the all the vultures watching, standard CEO protocol is to typically by some token amount of shares to provide some assurance to the market of some intent to remain invested (not dump nearly 1/2 million shares)
Excellent !
Dear Steven W.,
I'd been under the impression that once they file with the SEC to sell, they pretty much have to sell.
Also, these shares represent less than four tenths of one percent of Mr. Redstone's holdings in this class alone.
I'm unconvinced this represents a reaction to current events, rather than a timed sale of some shares to gain a bit of pocket change.
I do think, though, that Viacom is likely to face class action lawsuits from shareholders contending harm done to the company due to the criminal/civilly-liable activities of key employees (President of CBS News Andrew Heyward and Chief Lunatic Blather), and the failure of senior management to act to protect the company from harm from their illegal/actionable activities.
sitetest
I concur and that's why insider selling is not typically a reliable guage to measure what's going on in a company. Normal executives, like everybody else, want to add onto their houses or make some splendid purchase of one type or another; what's funny about this case, however, is that Redstone is not like your average exec. that sells his stock for such irregular purchases & he's not any ordinary executive. Usually, under such circumstances, the CEO is advised to not execute any pre-planned or already provided for options selling in this kind of an environment (lest they the market or other investors). He didn't have to do this & has plenty of other cash on hand if he needed it to do something. Plus it appears this was a 401K account, meaning he couldn't use the cash profits for such endeavors.
Who knows with these people. He might have made money or he might have lost money. He might need some money to contribute to Kerry, or he might need money for an attorney. They have any number of ways to spin it though.
Hey Guys, isn't this insider trading.
He knows CBS is going to give all viacom a black eye so he dumps viacom stock.
I believe you're confusing the the filing of a preliminary notice of intent, which has no such obligations or timing, with the actual sale (which this is / was). To the contrary, when certain (reporting) periods or other events arise, outside the general window of availability, they are typically precluded from the actual selling.
In fairness, I'll point out that Sept 15 was a big IRS estimated tax payment date, and he might have needed cash to pay same. I suspect this is no big deal.
Thanks. It appears to be a pretty normal transaction in your Yahoo link. Viacom executives seem to exercise their options and sell all of those new shares (on the same day) on a regular schedule.
Thus, this is *NOT* panic stock selling by Sumner (too bad, though).
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The key to the question of insider trading is whether he came to that conclusion (that CBS is toast) based purely on the same public things we've all witnessed, or whether there were insider discussions which would dispute such, unbeknownst to all of us outsiders.
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