V.P.: You may be onto something here. Several years ago I was following a company with, at the time, totally bogus accounting (Littlefield, Adams - LFA - still around on the ASE.) When the stock was near its highs the CEO, the person responsible for cooking the books, pledged a bunch of his restricted stock for a margin loan.
As the scam started to unravel and the stock drop, the brokerage firm unloaded all the stock he had left with them, an amount well above what he would have been allowed to sell on his own using Rule 144. He complained bitterly that it was unfair for the broker to have sold so many shares, that this was just a plot by those who knew the company's true value to steal a big block at a bargain price, that he was going to examine his legal options, blah, blah blah.
But of course it was the best thing that could happen to him - when it became clear that all the company's reported profits for the last few years had been just a figment of his pen, the stock collapsed to a fraction of the price at which his block had been sold.
Now maybe this is different here. Maybe Rendall doesn't want to sell his stock at this level. But if that is the case you do have to wonder why he didn't consider this possible outcome. Why did he need the money so badly? |
