Wow! The day after JP Morgan Chase accounced a 400% increase in its offer for Bear Stearns’ stock, James Cayne, who recently ranked among the Forbes 400 richest Americans and is the Chairman of Bear Stearns, sold his entire stake of over 5.61 million shares of company stock Tuesday at $10.82 a share, according to a company filing with the Securities and Exchange Commission.
This raises a number of important questions, not the least of which involves insider trading:
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Does he know something the rest of us don’t? In other words, is this the best offer that Bear Stearns is likely to get, beyond a doubt? Because if it’s not, it seems unlikely that Cayne would want to dump everything now, given the impact this trade might have on the deal prospects. And the street has bet that somehow Bear Stearns will fetch more than the $10/share on the table from JPMorgan currently, given that the stock is trading above $10/share.
- How does this reconcile with typical executive behavior around a deal? I mean, he dumped everything, and his wife sold another $500k in stock as well. Isn’t there some type of protocol that insiders should follow? Please, comments welcome.
- Is it possible that, in a strange (and maybe unexpectedly sacrificial way), the sale by Caynes may somehow be supportive of the deal? Difficult to rationally accept, but maybe Caynes is saying that his sale is not a reflection of how the market will react to the deal, but it simply is a reflection of his personal situation, and if it were at all likely to affect the deal he wouldn’t have sold his shares.
I haven’t uncovered his executive comp deal yet, but I’ll be looking to sniff it out. In the meantime, look here if you want to see a lot of executive compensation agreements or other executive employment agreements.
