July 17, 2007

Who Knew Whole Foods Market Sold Spam?

The CEO of Whole Foods Market apparently likes role playing, especially on the Internet. In fact, he likes it so much that he donned the full sock-puppet, praising his company and his own good looks while pretending to be someone else entirely on Yahoo message boards. The SEC has begun an informal investigation into his activities:

On the Internet nobody knows you’re a dog — or the chief executive of a Fortune 500 company.

Or so thought John Mackey, the chief executive of Whole Foods Market, who used a fictional identity on the Yahoo message boards for nearly eight years to assail competition and promote his supermarket chain’s stock, according to documents released last week by the Federal Trade Commission.

Mr. Mackey used the online handle “Rahodeb” (an anagram of his wife’s name, Deborah). In one Internet posting sure to enter the annals of chief-executive vanity, Mr. Mackey wrote as Rahodeb, “I like Mackey’s haircut. I think he looks cute!” ...

For executives like Mr. Mackey, sock-puppeting is probably more gratifying than effective in swaying opinion or stock prices — until they get caught. Then it is embarrassing, and for chief executives, at least, potentially illegal. Laws carefully prescribe what executives of public companies can say. The Wall Street Journal reported on its Web site Friday night that the Securities and Exchange Commission had begun [an informal] inquiry into whether Mr. Mackey violated security laws with the posts.

Mackey, it turns out, was too cute by half. His competitors now can go back through years of message-board postings and sue for any false or misleading information Mackey may have posted. If he put out false or confidential information in an attempt to boost his stock price, he could go to prison. The Times notes that Conrad Black just got convicted on a similar allegation.

On one hand, we can get a chuckle at chuckleheads like Mackey who play games on the Internet in hope of boosting his fortunes with comments about cute haircuts. However, what does it say about how Wall Street execs see investors? Do they think all of us are suckers who will buy Whole Foods stock just because Mackey has a cute 'do? Every day I receive dozens of spam stock tips in my e-mail, so someone somewhere apparently thinks they can sell saps on at least some of it.


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Comments (7)

Posted by syn | July 17, 2007 8:52 AM

What can be expected from an fashion industry which sells 'organic' e.coli ridden produce at 30% higher price than conventionally grown produce which, as indicated in numerous studies, offers the same nutritional value without the risk of eating produce grown with e.coli producing do-do.

If people really knew 'organically grown' means 'grown from do-do' I don't believe they would be rushing to take a bite...but they are and in doing so supporting the every global corporatists they claim they detest.

Posted by shockcorridor | July 17, 2007 9:49 AM

Oh no! Will this lead to a mass exodus of Californians out of Austin? One can only hope!

Posted by Angie Schultz | July 17, 2007 9:57 AM

I wrote about this on my blog the other day. I note that Mackey was dismissing the idea that Whole Foods would buy Wild Oats at $8/share, back in Jan, 2005. When Whole Foods, actually did buy Wild Oats early this year, the price was $18.50/share.

Maybe this is one of them there sneaky business tycoon maneuvers that us little folk can't comprehend.

Posted by RBMN | July 17, 2007 10:30 AM

Profit may not have been Mackey's initial motivation. There was also a female celebrity...can't remember the name (not a big one)...that was essentially doing the same thing. She was upset that fans were dissing her, based on false information, and she wanted to correct the record. Of course her posts contained so much inside information, that readers got suspicious. Just like the Mackey case. His initial motivation was probably more innocent than just hyping his stock, relative to others, but the temptation was too great.

Posted by G Charles | July 17, 2007 11:13 AM

Posts about how cute he is are funny, but posts like the following will cost him and Whole Foods:

"...Buy & Hold Whole Foods for the next 15 years. Tuck it away and forget about it. In 15 years you'll be very, very happy with this investment. I won't promise you that it will increase by 2,400% like it has the last 13 years, but IMO it will increase well over a 1,000%."

posted by Mackey (rahodeb) on 22-Apr-05 12:12PM Yahoo WFMI Message Board

Posted by Woody | July 17, 2007 11:28 AM

People tend to forget that corporations are a construct of the state, their existence allowed by and specifically outlined by law. Corporations don't have rights like We the People do. Mackey can say anything he wants as an individual, but if it has anything to do with the company he owns/works for, he is outside the bounds protected by the First Amendment, and subject to many specific constitutional laws specifying how he can run his business.

Even under the corporate umbrella, if he "operates" outside the limits of the powers granted him under corporate law, he can be held personally liable. Ask Ken Lay if you can find where he has been "spirited " off to.


Posted by DayNovo | July 19, 2007 1:05 AM

Mr. Mackey’s predilection for anonymous rantings is far from unique in the corridors of power. So much so that at least one startup has stepped into the void to assist acronym-challened CEOs. Check it out at: http://sneakybusiness.typepad.com/sneaky/2007/07/ceos-yearn-for-.html