SCO president denies executive insider trading allegations

SCO Group has denied allegations of insider transactions by its executives following claims that they have been cashing in on the...

SCO Group has denied allegations of insider transactions by its executives following claims that they have been cashing in on the company's inflated stock price.

 

Since SCO launched its contract violation case against IBM in March the value of its stock has risen dramatically.

 

SCO Group president and chief executive officer Darl McBride admitted that SCO executives, including chief financial officer Robert Bench and senior vice-president of marketing Jeff Hunsaker, had been offloading their shares but insisted the company was not guilty of any wrongdoing.

 

"Our guys have done what everyone else out there does - it's just that we come under attack for normal behaviour," he said.

 

"The official SCO response is that, yes, they did sell stock for a profit but last time I checked every publicly traded company in the US has the same phenomenon going on. People tend to sell shares when they have a gain, right?"

 

McBride said the company is being singled out for special attention because it has ruffled so many feathers with its legal battle against IBM and the open-source community. 

 

"If we so much as look at people cross-eyed people point the finger at us. It doesn't matter which way we turn - people keep taking shots at us. That part we're just starting to get used to."

 

He explained that a year ago the company had given four of its executives "restricted" stock which, requires the owners to pay tax on the value of their shares every six months.

 

Because the SCO stock has risen so dramatically over the past 12 months from around 66 cents to more than $10,  this created a major tax burden for the executives involved. One exec had been hit with a $150,000 (£97,374) income tax bill because of the situation and such tax bills have to be paid in a week in the US, added McBride.

 

McBride also denied accusations that the company's recent actions had been designed to inflate its stock price so that its shareholders, including executives, could cash in before the company collapsed.

 

"Well I haven't sold any shares, and I have around 150-160,000 of them. If we were on that kind of  programme I should probably be out there unloading shares too, right? If anything over the last six months I've been buying [SCO] shares," he said.

 

In a statement on its website, SCO said, "The SCO Group encourages its directors and executive officers to sell the stock held by them through plans designed to qualify for the protections provided by Rule 10b5-1 under the Securities Exchange Act of 1934." 

 

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