Posted on 04/10/2007 9:30:17 AM PDT by GMMAC
Pet food insider sold shares before recall
CFO calls sale a 'horrible coincidence'
Keith McArthur
Toronto Globe and Mail
(Business Section)
Tuesday, April 10, 2007
The chief financial officer of Menu Foods Income Fund says it's a "horrible coincidence" that he sold nearly half his units in the troubled pet food maker less than three weeks before a massive recall of tainted pet food.
Insider trading reports show that Mark Wiens sold 14,000 units for $102,900 on Feb. 26 and Feb. 27. Those shares would be worth $62,440 today, based on yesterday's close of $4.46 a unit.
That represented 45 per cent of Mr. Wiens's units. After the sale, he still owned 17,193 units and options to purchase 101,812 units, according to insider trading reports.
"It's a horrible coincidence, yes . . ." Mr. Wiens said yesterday.
"I hold myself to the highest ethical and moral standards possible. I wouldn't do anything to imperil the high governance standards that I demand of myself or anybody in the company."
Mr. Wiens said the first reports of illnesses and deaths related to Menu Foods products came in to the company's toll-free customer relations line in late February.
But he said he did not hear of any possible problem with the company's products until early March.
On March 16, the Streetsville, Ont., pet food maker recalled 60 million containers of cat and dog food.
"In terms of process, during any given year, we get consumer complaints all the time and it becomes matter of course for our technical people, so it's not something that necessarily gets flagged right to the top on an ongoing basis," Mr. Wiens said.
Menu Foods president and chief executive Paul Henderson has previously said Menu Foods ended its relationship with its Chinese supplier of wheat gluten on March 6.
By that date, it was clear "something was wrong" with some of the company's products, Mr. Henderson said at a press conference on March 30. In the first week in March, animals in routine taste tests of the company's "cuts and gravy" products began showing symptoms of kidney failure.
Mr. Wiens said he has not been approached by the Ontario Securities Commission or any other regulators about the timing of his unit sales. OSC spokeswoman Wendy Dey said the company routinely reviews insider trading reports, but does not comment on individual cases.
Jay Strosberg, a Windsor, Ont., lawyer who has filed a lawsuit against Menu Foods on behalf of a woman whose six-year-old cat died of kidney failure on Feb. 22, said regulators should look into Mr. Wiens's trades to see whether the buyers bought at inflated prices.
"At this point in time, we have absolutely no information about what the company knew or when they knew it," Mr. Strosberg said. "That information would not be disclosed to us until we're further along in the class action."
Mr. Wiens said he sold his shares in late February for financial planning purposes. He was prohibited from trading until Feb. 16 because of a blackout period related to the company's fourth-quarter results, he said.
But when he learned about the trouble with the company's products, he knew his trades would raise some questions, Mr. Wiens said.
"Certainly there would be questions when you piece all the timing together. I understand that," Mr. Wiens said.
The recall affected various customers including Procter & Gamble Co., Nestlé SA and Loblaw Cos. Ltd.
After the contaminant was identified as melamine found in wheat gluten obtained from a Chinese supplier, other manufactures also recalled their pet foods.
That cat needs to get wormed! :-)
That was really good! I just shake my head and smile at what you do here. I really do.
It's a shame that few recognize and appreciate this sort of brilliant subtlety.
</maudlin>
SNORT.
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