Unless someone has hacked the Security and Exchange Commission’s website, it would appear that Viacom’s Chairman and CEO Sumner Redstone chose to sell almost $12 million worth of stock in the midst of the Rathergate scandal roiling its wholly-owned subsidiary, CBS. A copy of the SEC’s Form 4 “Statement of Changes in Beneficial Ownership” posted on their website indicates that the billionaire exercised 341,500 options, and sold the stock on the same day, September 14, 2004.
As the worlds of journalism and politics buzzed with speculation over the depth of trouble CBS and Viacom faced, the boss of bosses sold stock.
When insiders sell stock during a corporate crisis, it always raises eyebrows. If the insiders are acting on knowledge unavailable to the public, they could face severe penalties, as Martha Stewart has so recently discovered.
One legitimate excuse for the sale would be if Redstone’s options were expiring on that day. He could then readily maintain that he was not reacting to inside information. But his options don’t expire until 2007. He is still holding options for another 658,500 shares, expiring the same day, August 1, 2007.
It is frankly mind-boggling to contemplate that Redstone would take such a step. There must be some compelling reason for him to have exercised the options and sold the shares, a reason which would immediately cause the SEC to accept it as valid. But we don’t know what it is.
