These AMC insiders sold $8 million of stock during last week’s boom
Half a dozen AMC leaders are cashing in on the "meme stock" madness.
A pair of four AMC officers and directors offloaded more than $8 million worth of shares last week, according to regulatory filings.
The stock sell-off came as shares of the world's largest theater chain skyrocketed as it is a favorite of traders who follow Reddit's Wallstreetbets page.
AMC rose 83% last week alone, based on an increase of 116% from a week earlier. And AMC is up another 15% on Monday, leaving the stock with a staggering gain of nearly 2,500% in 2021. And the year is not even half done.
Cornell Law School professor Charles Whitehead said the stock sale, first reported by Business Insider, poses no legal concern in his view.
"I'd be more surprised if they weren't selling what's going on with AMC's stock," Whitehead said.
'Very High Stock Price'
The filing shows that AMC's chief human resources officer Carla Chavarria sold 40,346 shares last week and raised $2.5 million. Filings indicate that Chavaria still holds over 44,000 AMC shares.
The other three AMC executives who sold last week were John McDonald, executive vice president of US operations; Daniel Ellis, Senior Vice President of Development and International; and Elizabeth Frank, Chief Content Officer.
Former US Commerce Secretary Gary Locke, who has been AMC's director since February 2016, sold $1.7 million of AMC shares last week, filings show. This was more than half of Locke's stake in AMC. Another AMC director, Anthony Sachs, sold shares worth more than $600,000.
AMC did not respond to requests for comment on the stock sale.
It is not only the officers but the AMC is also taking out the chips from the table. AMC sold 11.5 million shares last week, bringing in $587 million.
"AMC is taking advantage of this opportunity with what they perceive to be a highly inflated stock price," Whitehead said.
Indeed, last week's stock sale by the company included an unusual warning. AMC wrote in a filing, "Under the circumstances, we caution you against investing in our Class A common stock unless you are willing to risk losing all or a large portion of your investment. "
SEC On High Alert
Meanwhile, the Securities and Exchange Commission said on Monday it was looking into manipulative trading and other misconduct amid a boom in AMC, Gamestop and other meme stocks.
"SEC staff continues to monitor certain stocks in light of ongoing volatility to determine whether any market disruptions, manipulation trading or other malpractices have occurred," the agency said in a statement.
"We will act to protect retail investors if any violations of federal securities laws are found," the regulator said.
At the same time, SEC Chairman Gary Gensler is calling for new restrictions on pre-scheduled executive stock-trading plans, known as 10b5-1 plans. (AMC officials did not use 10b5-1 plans for these trades.)
During an appearance Monday at the Wall Street Journal's CFO Network event, Gensler said he intends to revise existing rules to reduce the risk of unfair insider trading.