Monday, July 16, 2007

Mackey's Defense and the WSJ Attack

Whole Foods has now added a section to the FAQ at its corporate website, "Who is "rahodeb" and why does the FTC quote this person?" The posting is apparently written by Mackey, and attempts to explain his actions in his Internet postings.

While Mackey's attempt to get his side of the story out is almost as questionable as his 8 year posting history, one has to wonder what the editorial board at the Wall Street Journal was thinking in its recent editorial. The editorial has an odd and almost juvenile tone, and downplays the entire episode. It also goes out of its way to take a shot at the SEC - "The SEC is now going to unleash its army of ambitious 27-year-old lawyers to read these blog posts to see if Mr. Mackey let slip any insider information."

First, the messages that we are discussing is Mackey's postings at a Yahoo! Finance Board, not at Mackey's blog. One would think that the editorial staff of a major newspaper would be aware of the difference. I suppose it is not an important mistake, but it is significant in the context of this discussion, since Mackey does have a blog, to which he posts using his own name.

Second, the SEC is looking at more than the leaking of inside information, as discussed here. There are a number of issues when the CEO of a corporation makes public statements - Reg FD comes to mind, as well as market manipulation; not to mention corporate stupidity. Releasing inside information is probably the least of the potential problems.

Third, an SEC inquiry is something that the WSJ should be applauding, not demeaning. We want the SEC to take a look and see if there was any inside information being leaked through those posts. While I have significant legal issues with the application of Reg FD to this posts, the SEC should look into it. And the concept that he is bashing a competitor while his company is planning to buy the stock is another topic that requires some investigation and review.

There are a number of posts at the board that warrant a second look. I am not saying throw an "army" at the issue, but no one should have a problem with the SEC putting one of its investigators to the task of reading the posts, making some independent judgments on their purpose and effect, and doing some followup investigation if warranted.

The snarky comment referencing the SEC's inability to hold onto staff members is simply inappropriate and lessens the impact...if any...of the entire editorial.

Mackey did make it to number 1 on TheStreet's Five Dumbest Things on Wall Street last week, with the title "Message Board Bandit"

UPDATE - Stockpickr has a collection of the Best of Mackey - selected quotes from his postings.
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