Whole Foods Market CEO under SEC Cloud

Whole Foods Market CEO John P. Mackey is being investigated for allegations of wrongdoing on the Internet relating to his company and its rivals. According to people in the know, the inquiry is being handled by securities regulators after talk surfaced of Mackey using the Internet to deliver opinions about Whole Foods and rival company Wild Oats Markets.

Sources close to the investigation stated Mackey used a pseudonym in an Internet chat room dedicated to Whole Foods for his purposes. The chat room was operated by Internet giant Yahoo! and is dedicated to discussions on Whole Foods. The name he used in the room was Rahobed, which when unscrambled is his wife’s name – Deborah.

Using this name, securities regulators alleged, Mackey posted a large number of messages in the chat rooms under the guise of opinions. In his messages, he apparently made derisive comments about Wild Oats, while praising his own company.

While company officials have offered no comment, Mackey himself is unrepentant about his actions. He said his posting were never representative of company policies, nor were they his personal beliefs; they were merely an attempt on his part to play devil’s advocate. Mackey further stated he had never made the mistake, knowingly or unknowingly, of divulging sensitive trade information in the room.

This is not the first time Mackey is being investigated. He is already facing investigation in an antitrust case by the Federal Trade Commission, causing him obstacles in completing a merger with Wild Oats Markets. The current investigation has been launched by the Securities and Exchange Commission.

There is still speculation about whether Mackey actually broke laws with his postings. Officials and corporate lawyers are offering differing opinions on this issue. So far, he seems to be on relatively safe ground, with enough escape routes to be able to sleep easy at night.

Mackey does not have to do much currently. The burden of proof lies with the investigators. They would have to prove convincingly his involvement in wrongful behavior; they would have to show he was trying to influence prices of company or rival stock by his messages.

Besides, the fact that no one is still really clear about when he made the derisive comments about Wild Oats – after or before the negotiations started – makes the task of the investigators harder, for now at least.