FINANCE

SEC charges four in Ross Stores insider trading scheme

BY Dan Berthiaume

Dublin, Calif. – The Securities and Exchange Commission (SEC) has charged four residents of Northern California with insider trading in Ross Stores stock options based on nonpublic information about monthly sales results leaked by one of the retailer’s employees. The SEC alleges that Saleem Khan was routinely tipped by his friend Roshanlal Chaganlal, who was a director in the finance department at Ross headquarters.

The SEC says Khan used the confidential information to illegally trade on more than 40 occasions ahead of the company’s public release of financial results. Besides trading in his own brokerage account, Khan traded in his brother-in-law’s account as well as an account belonging to another acquaintance. Khan also tipped his work colleagues Ranjan Mendonsa and Ammar Akbari so they could trade in Ross stock options based on the nonpublic information.

The insider trading resulted in collective profits of more than $12 million. According to the SEC, the illegal activity occurred from 2009-2012, when Chaganlal was fired from his position at Ross Stores.

“Khan and Chaganlal took advantage of confidential company data to systematically trade in Ross securities and reap millions of dollars in profits,” said Jina L. Choi, director of the SEC’s San Francisco Regional Office. “Even when insider traders try to conceal their profits and kickbacks by using other accounts and intermediaries, we’re committed to piecing together these widespread schemes and catching the perpetrators.”

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FINANCE

Safeway settles merger actions

BY Dan Berthiaume

Pleasanton, Calif. – Safeway Inc. has entered into a memorandum of understanding to settle the consolidated class action pending in Delaware state court filed on behalf of alleged Safeway stockholders against Safeway in connection with Safeway’s proposed merger with an affiliate of AB Acquisition LLC. The proposed settlement includes moving the expiration date of Safeway’s “poison pill” shareholder rights plan three months ahead to June 19, 2014.

The settlement also reduces the deadline to sell Safeway’s interests in Mexican retail chain Casa Ley to three years from four years. If Safeway’s equity interest is not sold by the deadline, holders of contingent value rights under a Casa Ley agreement would receive fair market value of the unsold value. Under previous terms, contingent value rights holders would not have received any unsold value.

The proposed settlement must be approved by the court and Safeway said it believes the claims of the suit are without merit and it will fight the suit in court if the settlement is not approved.

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FINANCE

Sears Canada enters Calgary North Hill development agreement

BY Dan Berthiaume

Toronto – Sears Canada Inc. has entered into a binding agreement with Concord Pacific Group of Companies to pursue the development of the 12-acre Sears site located at the North Hill Shopping Center in Calgary, Alberta. Closing under the agreement is conditional upon satisfaction of conditions such as site investigations and obtaining the approval from the city of Calgary for the project, which are expected to take some time.

Sears Canada plans an infill project consisting of residential high-rises, with a potential retail component. The arrangement contemplates the sale of a 50% interest in the site for a value of approximately $15 million, to Concord, following which the parties would enter into a co-ownership joint arrangement. If third-party debt financing cannot be obtained, Concord, and not Sears, will be responsible for providing debt financing to develop the project. Sears Canada said the project may not be completed based upon a multitude of internal and external factors.

"Sears has been part of the Calgary landscape since 1958 and we are excited about the possibilities for the North Hill site as conceptualized by Concord and Sears," said Doug Campbell, president and CEO, Sears Canada Inc. "We plan to continue operating our store at North Hill as we have for almost six decades and seeing this new development adding positively to the landscape and economy of Calgary. We look forward to working together with Concord and moving the project forward."

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