Insider Stock Sale Crashes GM Stock
Shares of General Motors sank to their lowest levels in 76 years today following yesterday's disclosure that several GM executives sold their shares of the automaker's stock.
Shares of GM have been hovering just over the $1 mark all day today, a level not seen since 1933. Which was, by the way, the nadir year of the Great Depression.
GM chief executive Fritz Henderson -- who replaced Rick Wagoner, fired by the Obama White House -- has said in recent days the company appears to be moving toward bankruptcy, which has been depressing the stock price prior to today.
If GM goes into bankruptcy, GM stock will be worthless. Wall Street is interpreting the GM-insider stock-dump as proof that the company is heading into bankruptcy.
The dollar amount of stock sold by the executives -- including former GM vice chairman Bob Lutz -- is not that much: $315,000.
But that amount is a shocking reflection of how much the troubled automaker's stock has fallen in a relatively short time.
At $1.10 per share, $315,000 equates to about 286,000 shares.
One year ago, 286,000 shares were worth $5.9 million.
Two years ago, they were worth $8.7 million.
Five years ago? $12.5 million.
Even though the top GM executives essentially squeezed the last bit of air out of GM stock, at least they did it honestly, unlike the late Ken Lay, the chief executive of Enron.
Even as Lay was telling Enron employees (captured on video) to buy Enron stock, he was selling his own.
What was particularly slimy about this move was that, instead of selling his Enron stock on the open market -- which would have been reported instantly by the SEC, as the GM sale was -- Lay sold his Enron stock back to the company, which meant the sale didn't have to be reported until the end of the quarter.
May 12, 2009; 2:48 PM ET
Categories: The Ticker | Tags: Bob Lutz, Enron, Fritze Henderson, GM, Ken Lay, Obama, Rick Wagoner
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