Sgt. Schultz, where are you?

You’re the CEO of a large company. To protect against allegations of insider trading, you have a plan set up by which a certain amount of stock is sold on pre-arranged dates in the future. In February this plan sells $35K of stock.

In February, you also sell $13.4 million in stock. And another $16.2 million last week and early this week. This represents about a third of your stock in the company. None of it pre-arranged.

Then your company announces on Tuesday that it is investigating an attempt to breach its payment systems, a la Target. There had been “unusual activity” beginning two weeks earlier. I think they were referring to the potential breach.

“Sally Beauty’s CEO Sold Stock,” Wall Street Journal, March 8, 2014 B4 http://on.wsj.com/1kEwZpV

What happens when later events suggest that prior acts were motivated by knowledge that you may or may not have had? How do you protect yourself against these claims? How do you prove that you knew nothing?

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Filed under Business Case, Controls, Definition, Information, Legal, Requirements, Risk, Value

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