Fateful three-day insider trading spree
|October 22, 2002|
Former execs. cashed out of HOMS before revealing financial statements were faulty
Inman News Features
In a three-day period last summer, executives at Homestore went on an option selling spree that has attracted attention because it occurred two-and-a-half months prior to announcements about the online real estate company's misstatements of prior-year financial results.
On July 30 and 31 and Aug. 1, last year, former Homestore Chairman Stuart Wolff, SVP David Rosenblatt, VP Peter Tafeen, COO John Giesecke and executive Catherine Giffin indicated their intention to sell multiple large blocks of shares and each sold two blocks of shares that in aggregate exceeded $11.4 million worth of stock, according to forms filed with the Securities Exchange Commission. Today, the company's entire market capitalization hovers around $42 million.
Wolff's sales totaled a tidy $3 million, and Tafeen's total also was above the $3 million mark. Rosenblatt's total was nearly $2.12 million. Giesecke's total was about $1.67 million, and Giffen's sales amounted to more than $1.5 million, according to SEC filings.
The shares sold by the executive class were purchased through the exercise of stock options at prices ranging from $1.20 to $9 a share and were sold through the NASDAQ market at $27-$28 a share. The same shares now trade at around 33 cents.
In a Los Angeles courtroom yesterday, Giesecke pleaded guilty to securities fraud and former Homestore CFO Joseph Shew pleaded guilty to securities fraud and wire fraud charges. Former Homestore VP John DeSimone is expected to plead guilty to insider trading next week.
Giesecke has agreed to repay more than $3.4 million from the exercise of Homestore stock options and to pay a $360,000 civil penalty. Shew and DeSimone agreed to repay more than $1 million and approximately $177,800, respectively. A statement from the SEC said the $4.6 million will be paid to the benefit of the company's shareholders.
Copyright: Inman News Service