By Brad Friedman from St. Louis, MO…
On a recent Tuesday in August, several days after California Secretary of State Debra Bowen’s pronouncement of decertification and then new, restrictive recertification of Diebold, Inc., voting systems, ten officers of the company simultaneously sold off some 10,379 shares of stock at a near 52-week high for the troubled company.
The ten Diebold insiders sold at $53.05 per share, netting more than half a million dollars in the transactions. The stock would begin to plummet nearly 15% a week later, just before it was disclosed that Diebold would spin off its elections division into a new company called “Premier Elections Solutions,” after which the stock began a modest recovery.
Two days after the mass August 7th sale, two more Diebold officers would sell another 2,166 shares at the same $53.05 price.
All told, The BRAD BLOG has found the insider sales totaled $665,512 in the week before the value of the company’s stock price would plunge in a massive sell-off triggered by a top financial analyst who had lowered the company’s rating from “buy” to “hold.”
Notably, the sales by the company officers did not occur immediately before or after the release of Bowen’s findings of severe vulnerabilities in the company’s voting machines, or immediately before or after her decertification/recertification announcement.
Instead, the sales came on a weekday when nothing else publicly — other than the report we filed concerning security issues noted during our visit to Diebold headquarters in Allen, TX — would seem to have prompted the sale.
A financial analyst that we spoke to, who asked not to be named, said he saw the spike in sales by the company officers as “a point of interest,” noting “some smoke there,” and adding that he found it notable that there had been no similar pattern of sell-offs by company officials in Diebold’s recent history.
While the public did not yet know, on August 7th, of the impending plan to jettison Diebold’s election division into a new, “independent” outfit with a new name, officers of the parent company likely had known long ago about the planned move…
The Internet domain for the new spinoff company, PremierElections.com, was purchased in September of 2006, according to Internet records. As well, the corporate parent, Diebold, Inc., had stopped using the corporate logo on voting systems many months earlier while it was attempting, unsuccessfully, to find a buyer for its troubled election division, Diebold Election Systems, Inc.
“It’s certainly of note that so many company officers would sell off on the same day, just before bad news was released to the public,” the analyst explained when we asked about the apparent anomaly. “It seems like a large number of transactions. There’s certainly some smoke there,” he said, while taking a look at the company’s records.
Though he noted that the size of the sales in question didn’t appear to be huge, nonetheless, the question of what went on there “begs to be asked,” he told The BRAD BLOG.
Did company insiders have advance word of the trouble to come? Why did they simultaneously sell more than half a million dollars of stock on the same day in August, unload another $100,000 plus worth of shares two days later, and yet made no other sales or acquisitions since?
This wouldn’t be the first time the company may have stepped afoul of legal and financial issues.
In August of 2006 it was revealed that the company was under “formal” investigation by the SEC, reportedly due to allegations of misstatements to investors concerning projected revenue from voting machine sales and long-term service contracts.
On July 25th of this year, MarketWatch reported that Diebold was delaying its second-quarter earnings report and would be “seeking guidance on the reporting of some of its revenue with the Securities and Exchange Commission.” At the time, the company “cited ‘questions that have arisen during the ongoing formal investigation’ by the SEC,” MarketWatch explained.
As well, the company is also currently busy defending itself in a Securities Fraud Class Action lawsuit filed in December of 2005. That lawsuit alleges improprieties by company board members including fraud, insider trading, manipulation of stock prices, and concealment of known flaws in the company’s voting machines.
CORRECTION: Our original report had stated in one paragraph that more than 100,000 shares of stock was sold by two company officers in the days following the original simultaneous Aug 7th sale by the original ten officers. It was, instead, more than 100,000 dollars worth of shares that was sold. We regret the error and have corrected it in the above article.
Brad, you are ALL OVER THESE FUCKERS!
That is ILLEGAL!!! Slammer-time!!!
…and anyone who doesn’t think insiders are in the process of doing the same thing with all stocks in general, during this economy crash they’re not reporting on in the CMSM, well…just look at THIS article!
Make $$$ going up & down!!! Only insiders can do that, remember the 9/11 “put options” on airlines? Nothing to see THERE!!! Right??? Lucky guess on the airlines!!!
These insiders should be fully prosecuted like Martha Stewart, although they are probably WHITE MEN…so it won’t happen.
My congratulations and gratitude on some excellent investigative journalism. Let us keep the pressure on these abusive and irresponsible manufacturers to the greatest extent possible.
Has anyone brought up the matter of this fishy sell-off with the SEC? The best way to get the SEC acting on something like this is to get one of your senators to ask them to pay attention. Otherwise, stuff brought up by members of the general public is very slow to be addressed. (Say, six months from now you get a form response to your initial letter and then nothing at all unless you give them another letter to take six months to respond to.) This isn’t just something to write about, report on. It is something to make certain does not escape the notice of authorities. Just the fact of analysts and journalists having the story usually does not prove to be enough, and the ones in the business are, of course, loath to move on this sort of thing. Right here is a means for activists to act. Saying, writing, commenting doesn’t get it done.
I have entirely too much experience with precisely this. If you want the government to work on this sort of thing, you have to be a relentless presence. They’re too busy avoiding everything they don’t absolutely have to address, for fear of actual accomplishment, which is THE danger zone for all bureaucrats and politicians. So you need as much information and documentation as possible, and you have to be someone they cannot safely ignore. A senator is ideal.
Doesn’t matter that they’re already under investigation for other stuff either. If you want them investigated for this, you have to sit on the SEC. They will not be sat on by peons without sponsorship by someone on whom they can blame such actual fulfillment of their job responsibilities. Horrifying, I know, but this is how it goes.
Of course, any Diebold shareholders have standing to get their attention in court….
Hurricane Dean Projected path
Sounds like Harken Oil to me…
Nothing happened at your link for me, Flo, so here is another link for the projected path as against historical hurricane trajectories, and I’m really wondering what makes them think Dean will just continue on through Mexico, with all that history that says the contrary….
[Oh, just tried it on Firefox and it’s a Howard Dean joke… very cute….]
Now might be a good time to point out the following article by Dawn Kopecki in Business Week Online on May 23rd,2006:
So, given the broad definition of “national security”, umpteen corporations, including Diebold, can get away with not reporting accurately to their shareholders!
Now the question is, does Negroponte still hold this power, or did it pass on to the new Intelligence Director?
Or will Bush’s SEC just drop it, like they did for him when he dumped his Harken shares?
Barbara
Interesting questions, but I don’t think the reporting bears on whether or not anyone can be held accountable for inside trading…. And, in general, agencies will indeed just drop what isn’t popular with their bosses unless a great deal of pressure is applied to prevent that. It really does come down to a raw battle of wills most of the time, and criminals always seem to have more will than the rest of us. They never are stopped until we get the will and keep it.
I’ve got the will — I just keep writing and posting and commenting and calling and pointing and informing — to rally the will of more people!
There’s always value in rallying the people!
But, I meant for each thing you/we want them to address, to investigate, to get prosecuted, someone/s has/have to be sitting on the actual people inside the actual agency and not letting up until you/we get satisfaction. Otherwise we end up being sound and fury signifying nothing. It took me a long time to grok this point, that for all my calling and petitioning and stumping, nothing was gonna go my way until I was right in the middle of the actual battle, with the actual authorities. My whole county was up in arms, in flames, with indignation over the matter I ended up making the authorities address, and they absolutely would not have dealt with it had I not dropped everything and fought the fraudsters at every bureaucratic turn with the actual SEC lawyers in charge of that gig.
I was appalled down to my toenails, but there it is. All we’re doing is making a lot of satisfying noise unless we get down to that kind of work. And that is what these criminals are relying on when they undertake this in-yer-face criminal activity. They know we will bellow our fool heads off, but they also can bank on us not getting down to that level to fight them. It’s mostly because very few of us yet believe we actually have to go in and do our legislators’ and government officals’ jobs for them. We so seriously actually do, Barbara.
It’ll be interesting to see if this will even be a blip on the radar, considering how their extremist attacks against democracy hardly registered with the Overwhelmingly Fascist Media of the mainstream.
Well, that’s what I’m talking about, Adam. If someone doesn’t personally take enough offense at this possible insider trading, say, to get the information and evidence to the SEC, and the FBI/USA axis, to insist and keep insisting that it be investigated and prosecuted, it doesn’t even matter if the fascist media has made a peep about it. They could be hollering to the rafters about it too and nothing would happen unless SOMEONE actually went in and made sure of it. We keep thinking that all it takes is enough people to know about this stuff for them to redress the wrongs. Not so. It actually boils down to someone sitting on the proper authority till it happens, and they won’t even let you be the one sitting unless you’ve gotten someone important to tell them to let you.
I had to make my case to Dianne Feinstein, who called the appropriate supervisory person at the SEC and told them to deal with me. I had to take my files in to the FBI to get some prosecution for banking fraud, and it turned out I needed her to have interceded with the USA’s office too because they found a flimsy excuse not to prosecute, even though I had prevailed at the SEC and had given ironclad proof of banking fraud to the FBI. They always outlast you unless you go outright postal on them and do not let up, even after you think you’ve done everything.
In fact, the statute on banking fraud is, I think, ten years… so maybe I have another year to get Feinstein or Boxer to take this up with the USA. But most people think the perps have suffered enough from years of civil litigation because of it. I don’t.
Anyway, I guess I’m screaming to Brad, and to everyone, that this is where activists have to actually take action, actually act, or it’s not activism anymore; it’s something else.
Wow, I can’t help but wonder if therealrobp, aka Diebold’s Robert Pelletier (Wally O’Diebold here at Bradblog), sold stock!?!?!
PLEASE DO NOT GO HERE and leave him a comment asking him if he sold his stock or not. We don’t even know if he still has a job with Diebold…OOPS, Premiere, or not.
Again, just to make sure I was absolutely clear, please don’t go HERE (furiosity.com) and leave a comment asking him things. Clearly, since he deleted all his older stuff last June and started the site over, he must be really depressed or something.
Yes, seriously, PLEASE DO NOT GO THERE. The world is ugly enough already. That guy is a severe bummer. The last thing we need is to incite more crap from him. Really bad idea.
Plunger!
Glad to see you’ve branched out into the visual arts! I think you should make a playlist of the videos so you can make a comment with one link in it. That way the software won’t hold up your posts, and blog administrators won’t be alerted to approve or delete your comment.
Rats scurrying from a sinking ship, yelling “Die boldly” as they go.
I can’t imagine anybody in the Bush DoJ punishing them.
At least we’ve gotten rid of some. Now, let’s get rid of the rest.
Back in the early months of 2004, when CA Sec of State McPherson was getting the sales spiel from these companies to buy buy buy, I wrote his office, Gov. Schwarzenegger’s office, and the San Fran Chron with my concerns about our then roll-over-and fork-out-the-money Sec of State’s decision-making around this. I never got a single reply, ever, from McPherson’s staff, Schwarzenegger’s staff wrote back to say it wasn’t their problem so take it to the Sec of State’s ofc, and the SFChron’s editorial board was acting as if this was a non-issue, by not really reporting on it and not including letters to the ed about it.
I then wrote Woolsey and complained to her about this “who’s on first” runaround. She at least wrote back to say that elections fell under the jurisdiction of the states, but that she would be keeping an eye on it. So I wrote her back and said that while elections may be the states’ business, the decision to allocate all this money via HAVA was a national legislative decision, and I encouraged her to make this more of a national issue. I also wrote to Feinstein and Boxer to let them know what had occurred around my citizen inquiries, and that I felt that our national level legislators needed to take a better interest in how the HAVA money they had allocated was being spent.
In my letters to everyone, inc. the Sec of State, I compared what I saw happening with these electronic voting machine companies to what had happened to Californians in the Enron debacle, and shame on them to sit back and let the same ruse happen all over again, before even a blink of an eye had transpired.
Well, Brad. All of my hunches are coming true. You rock!
Add 1″ thick sisal, a tall tree, and a horse ready to gallop to a Diebold manager and what do you get?
A hanging chad.
Its not clear whether these were last minute “oh shit” trades, or whether these were trades planned 6 months ahead of time as part of a normal insider trading ‘planned transation’.
Information about insider trading (both legal and illegal).
http://www.money-zine.com/Investing/Investing/Insider-Trading-Information/
Just because they sold a lot of stock several days before a big blow to the company doesn’t mean they did it illegally or even unethically. They might have reported 6 months ago that they planned to sell X shares on that date… which would be hard to argue they did it illegally.
Disillusioned
I don’t even think they could duck it that way, since they appear to have prepared this spinoff company last September. Pretty flimsy to try to say in court that they hadn’t been planning this for when things would go south since they clearly were, and they were in charge of when they did the spinoff. They knew Debra Bowen was likely to win back then, and they also knew exactly what her deadlines would be for fulfilling her campaign promises then too. So maybe even especially if they placed the orders that long ago these would still be suspect trades.
Get word out before the corporate controlled madia out-lets can ignore our right to VOTE.W/O proper oversight
by the very people we elected,this misuse of our voting rights and our election process will occur again
if we let it.Forgive me,but is this not government of
the people by the people for people ? Or is it instead,
government of the corporations by the corporations for
the corporations special interests ? It is,if enough
American voters do nothing …about it.