Big Lots CEO Probed by U.S., SEC Over Stock Trades
Big Lots Inc. (BIG) said that Chief Executive Officer Steven Fishman is under investigation by the Justice Department over stock trades he made and that it received a grand jury subpoena from the Manhattan U.S. attorney requesting documents relating to the trades.
“We are fully cooperating with the U.S. attorney in connection with the subpoena,” the Columbus, Ohio-based discount retailer said yesterday in a regulatory filing.
Big Lots said the Securities and Exchange Commission is also conducting an inquiry into the matter. While the company hasn’t received a document request from the SEC, it expects one, Charles Haubiel, Big Lots’ chief administrative officer, said in an interview. Manhattan U.S. Attorney Preet Bharara asked for information on Fishman’s trades over the past couple years, he said.
The inquiries come after the company, which has more than 1,400 U.S. stores, announced Dec. 4 that the 61-year-old Fishman, who took over in July 2005, would retire as soon as a replacement is found.
“Unequivocally, his retirement had nothing to do with this,” Haubiel said.
Ellen Davis, a spokesman for Bharara, declined to comment on the investigation. John Nester, a spokesman for the SEC, declined to comment on whether the commission was investigating Fishman.
Big Lots declined 0.6 percent to $29.89 at the close in New York. The shares have fallen 21 percent this year.
Fishman on March 20 sold 227,500 shares at about $45 for $10.3 million. On April 23, the company told investors its first-quarter sales had slowed, and the following day the stock fell 24 percent to $34.71.
That led to shareholder litigation, including a lawsuit brought on behalf of the company by the Louisiana Municipal Police Employees Retirement System. In a complaint filed in federal court in Columbus, the plaintiff said that executives and directors, including Fishman, sold stock in March based on their knowledge of material, nonpublic information.
“We don’t believe there is any merit to the claims,” Haubiel said. He declined to comment on whether Fishman or any other insiders would have been in possession of material, non- public information at the time of the trades.
Executives and directors were allowed under company rules to sell stock during March because it was an open trading period after the company announced fourth-quarter results on March 2, Haubiel said.
Public records show that Fishman’s trade on March 20 wasn’t part of the plan he had used in the past to sell shares on a preset schedule or price. Such 10b5-1 plans are used by many companies to avoid the appearance of insider trading.
Records also show that from March 6 to 22 there were more than a dozen stock sales made by other executives and directors that weren’t part of 10b5-1 plans.
There haven’t been any inquiries from regulators into trades made by other executives or directors, Haubiel said. Those trades were also within the open trading period and allowed by the company, he said.
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