Timeline:
Feb 20th - Menu Foods receives first reports of problems with pet food.
Feb 26th - Menu foods commence tests on 50 animals.
Feb 26th & 27th - Menu Foods CFO sells half his shares for $102,900.
March 16th - Recall announced. Share price plunges
April 10th - CFO calls his stock selloff a horrible coincidence.
So? The CFO isn’t likely to even be hearing about a handful of very preliminary reports of a possible problem with food contamination. And if the first tests were STARTED on the 26th, obviously there wouldn’t have been any results the same day. Even if he could have known, do you really think the CFO of a publicly traded company would be stupid enough to do something this transparent? To make himself permanently unemployable in his field (not to mention risk jail time AND disgorgement of profits), if he had reason to believe his current employer might be headed for bankruptcy, all for a maximum possible profit of US$90,000 (and as of now a profit of about $35,000)? The chances of not getting caught if this really were a case of trading on inside knowledge are precisely zero, and the CFO of a publicly traded company certainly knows that.
Sorry, but I work in the banking and securities industry, and am quite familiar with how insider trading schemes are pulled off, and this is not it. If he wanted to make money off insider info, he’d tip off some of his friends who don’t work for the company, advising them to sell the stock short (and/or to sell what they hold, if they’re already long) and making clear he expects a cut of the winnings.
You really need to get off this conspiracy theory stuff.
My reservation about the timeline that everyone is focusing on is that Menu Foods apparently does ROUTINE, QUARTERLY taste tests, and it has been stated that the taste test cited in this timeline was their routine quarterly testing... not testing done in response to complaints.
So I’m not ready to hang them yet about the taste-test issue and the timing of it, and the supposed failure to act (”while more pets were dying”) while they completed taste tests, until the investigation is complete and it can be proven one way or the other whether the taste-tests were, in fact, their routine quarterly taste tests, or whether they were in response to complaints about the food.
If it is determined that these taste tests were in direct response to complaints, then the red flag is going to go up (even higher than it already is).
Also, even if these taste tests were in direct response to complaints, the CFO who sold his shares did so on DAY 1 of the taste test, so he wouldn’t have even known the taste-testing was deadly.
In other words, it’s hard for me to find a clearly sinister motive here... Not to mention that securities sales are monitored and it would be way too easy to connect these dots if it were true... and he would end up in jail. Greed is one thing, but not many people are willing to risk jail, and a CFO certainly knows the ramifications of unlawful Insider Sales.