Friday, December 07, 2012 4:41 pm
Probe of Big Lots CEO's trades roil shares
The Associated Press
In a Wednesday Securities and Exchange Commission filing, the Columbus, Ohio, company said that it received a grand jury subpoena from the U.S. Attorney for the Southern District of New York on Nov. 29 requesting information on trades by CEO Steven Fishman. The SEC has also begun its own probe on the matter.
The Wall Street Journal reported Thursday, citing a person familiar with the matter, that the Federal Bureau of Investigations and federal prosecutors were looking at whether Fishman had sold $10.3 million in stock in March based on an insider's knowledge of a coming negative corporate announcement.
Officials for Big Lots and the FBI did not immediately return calls seeking comment. An SEC spokeswoman declined comment.
The Journal said that investigators were interested in the March trades because they occurred outside of Fishman's "10b5-1" plan.
The SEC's 10b5-1 rule lets executives trade company stock, even when they have insider knowledge, according to a pre-set plan for certain stock transactions over a period of time. That way, executives can say their sales of stock weren't prompted by new information that wasn't publicly available to investors.
According to the Journal, Fishman's trades came about a month before Big Lots cut its sales guidance for its first quarter, after the market closed on April 23. At that time, the company said that sales had begun to slow in March, worsening in April. It projected a slight drop in revenue in stores open at least a year, a key measure for retailers, down from its previous forecast of a slight increase. The company's stock sank 24 percent on April 24.
News of the investigations comes as the company seeks a new CEO. Big Lots had said Tuesday that Fishman, who is also its chairman and president, would be retiring once the discount retailer found a replacement for him.
Shares fell 3.8 percent on Wednesday, slipped less than 1 percent on Thursday and tumbled $1.71, or 5.7 percent, to $28.18 on Friday. That's a 9.9 percent drop since Tuesday's close of $31.27.