Whole Foods/Wild Oats merger

[Boris]

I don't get how it's such a big deal that a CEO was talking shyte about a competitor company? This happens all the time. Why would the SEC get involved?

[Kneel B4 Zod]

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I don't get how it's such a big deal that a CEO was talking shyte about a competitor company? This happens all the time. Why would the SEC get involved?

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it's just character/sanity questions about the CEO. people have always thought he was an eccentric/weird/abrasive guy, so now he does something like this, and it just cements that image, which probably isn't ideal for the CEO.

[Aloysius]

Boris - I'm not exactly sure myself, in the article they pointed out:

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"This evidence raises more doubts about his sanity than his criminality," says Jack Coffee, a securities law expert at Columbia Law School. "The merger is a major business strategy, and he's undercut it with reckless, self-destructive behavior. It's a little weird, like catching him as a Peeping Tom."

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"It's more of an embarrassment than an issue of profound ethical and legal consequence," says Eric Dezenhall, a crisis communications consultant. "It shows a degree of obsessiveness that's a little disturbing."

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Obviously (and I was kidding above) posting on 2p2 is very different from what this idiot did but:

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For the curious, Yahoo on Thursday put up a link from its Finance page to all 1,394 postings with Mackey's screen name on all its message boards, going back to 1999. Some days, Mackey was a heavy poster. On Sept. 5, 2005, for instance, he posted 17 times from 12:03 a.m. until 11:09 p.m. On Nov. 11, 2005, he posted 17 times from 12:04 a.m. to 5:25 p.m.

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... if 1,394 posts in 7 years is "heavy posting" we are all doomed.

-Al

[bobman0330]

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I don't get how it's such a big deal that a CEO was talking shyte about a competitor company? This happens all the time. Why would the SEC get involved?

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Making false or misleading statements with the intention to fraudulently affect the purchase or sale of securities is illegal.

There are a couple ways this could be securities fraud. The clearest way would be if this scheme was intended to drive down the price of OATS stock so WF could acquire the company cheaper. A less convincing argument could be made that this was just a malicious scheme to make other people trade OATS at a lower price to generally undermine the company. That's not the traditional securities fraud scheme, but it's basically what Moldofsky was convicted of in the article I linked above.

That's not to say he's obviously guilty. There are a lot of issues to overcome. For example, did he really say anything false or misleading? Assuming he didn't tell any actual lies, you could still make a strong argument that posting all this analysis without revealing his identity and his possible ulterior motives was misleading. His intent is also a big issue. He's going to claim that he was just talking trash or providing unbiased analysis. Is that convincing? Not to me, but it's hard to prove otherwise.

[Aloysius]

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Making false or misleading statements with the intention to fraudulently affect the purchase or sale of securities is illegal.

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Right but with no weight behind said statements (e.g. an anonymous Internet poster) - seems groundless. However, if you look at Mackey's "farewell" post:

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Aug. 12, 2006: "This will be my final message on this bulletin board as I have lost my bet with hubris12000. ... Mr. Market hit the panic button and the stock has crashed, down almost 40% from its high of just a few months ago. Whole Foods itself has a very bright future and I will continue to hold my stock for a very long time — until the growth begins to significantly slow. I've enjoyed my 8 years on this Board, but all things must come to an end. ... Surgeon General and Boston Cowboy — you were both right about my true identity all along. Congratulations on your cleverness."

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I mean - does he out himself? If so you could read through his post history and all of a sudden you have what is possibly very inside information from the CEO of Whole Foods.

Either way - this guy is a total jackass.

-Al

[depokerstar]

Fortune Magazine - Whole Foods CEO

Received this issue the last day or so. The Q&A was writtien before last week's trouble.

[Ron Burgundy]

Oh great, so the CEO is a major nutjob douche, so now that's what will get all the attention. No one will talk about the real problems with this and all other antitrust suits.

The purpose of antitrust laws is to protect the businesses that can't compete in the market, forcing consumers to pay the higher prices of those failing companies. Or in this case, stores that fail to attract organic/natural foods customers.

The businesses that are failing in this market are pestering (read: bribing) their politicians and the FTC to prevent this merger. They know they'll be even less competetive in the market if WF can charge lower prices because of their higher volume.

This is bullshyt.