Securities Law

SEC Probes Whole Foods CEO's Posts


Anonymous online posts by the chief executive of Whole Foods Markets have spurred an informal inquiry by the Securities and Exchange Commission, the Wall Street Journal (sub. req.) reports.

John Mackey used the pseudonym Rahodeb to cheer good financial results at Whole Foods and pillory management decisions by rival Wild Oats Markets, according to a filing last week by the Federal Trade Commission. (See this ABAJournal.com post for details.)

The SEC is likely to probe whether Mackey contradicted the company’s prior statements, was too optimistic about its finances, or selectively disclosed information, the Wall Street Journal says.

Creating an online identity to praise or defend yourself or your company has a name: “sock-puppeting,” the New York Times reports. Other high-level executives, including media mogul Conrad Black, have posted anonymously to make a point or spar with critics.

In Whole Foods’ case, Mackey’s comments could be used to bar its proposed acquisition of Wild Oats, or could be cited in a suit by the competitor, the Times says.

Paul Kedrosky, who writes the blog Infectious Greed, said he thinks sock-puppetry is becoming more widespread. “I’m convinced this is the tip of the iceberg,” he told the Times.

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