Opinion on  Whole Foods Market Inc (WFMI)     Sector: Services  >  Industry: Retail (Grocery)
Whole Foods' Fiasco: What Do CEO John Mackey and Patrick Byrne Share in Common?

Both love to post anonymous on investment message boards. The difference is that everybody (or almost everybody) knows that Patrick Byrne , CEO of Overstock (ostk), uses the alias Hannibal to post in varoious venues. But in one of the year's most bizarre business stories so far, broken this afternoon on WSJ.com , he has been one-upped by none other than Whole Foods (wfmi) CEO J ohn Mackey, who apparently has been posting for eight years under the alias Rahodeb.

Truth is stranger than fiction" stories don't get better than this. Posting as someone other than himself, according to the story, Mackey would routinely chat up Whole Foods. But the best part is he spent a considerable amount of time chatting DOWN Wild Oats (oats) before his company made a bid to buy the rival grocer.

Why a CEO (or any officer, for that matter) would post on an investment message board, either anonymously or otherwise, is beyond me. Never mind the obvious regulation FD concerns: It's just wrong! If a CEO wants to have his own blog on his own company's website that is vetted by the company's legal counsel -- you won't find any argument here.

To post on outside message boards, especially using an alias, not only shows poor judgment but strikes to the heart of a company's culture and makes you wonder what else might not be quite right.

Simply remarkable. The beat goes on...

One of the astounding parts of the Whole Foods (wfmi) story is the lack of outrage about CEO John Mackey's postings on a message boards. A scroll through the comments on my blog regarding Mackey shows a decidedly mixed reaction on something that legal or otherwise was clearly wrong. And just because he was running a successful company doesn't mean he should be let off the hook.

Even more astounding is the arrogance of Whole Foods, which hasn't yet addressed the fiasco in a formal, public statement. In the very least, the board of directors should issue a release saying that it has appointed a special committee to investigate the matter. But so far, Whole Foods hasn't said anything.

The beat goes on...

In the wake of John Mackey's message board fiasco at Whole Foods (wfmi) a regular critic of mine, who goes by the name of Fran wondered: "If Mackey's poor judgment might be read...as an attempt to manipulate the share price of a stock, can't the words of a shortseller...be read as a similar attempt to manipulate."

That got me to thinking about how it's okay to say anything as long as it's positive. As I wrote on the blog: "Fran, I find it interesting that you believe a shortseller, or those associated with shortsellers, shouldn't be able to post anonymously on a message board. But you say nothing about people who are long stocks.

"In other words, you're saying that as long as the information supports what you believe, and is helping pump up a stock, it doesn't matter who it comes from, even if it's biased hedge funds or others....The minute a poster disagrees with you, or posts possible contrary evidence, you believe it is tainted.

"Stock message boards, my dear Fran, are really open to posts from anybody, but should be avoided by executives and others from public companies. Wise investors troll them looking for information from disgruntled insiders or others with insightful analysis. The trick, of course, is figuring out what is real and what is Memorex. CEOs, anonymously or identified, should know better.

"Other than that, as the judge said in his ruling against the Rocker Partners' suit vs. anonymous message board posters: Anonymous information on message boards isn't really much different than the handwriting the wall of a public restroom. Use it at your own risk! That's why, in general, I regard them as cesspools."

Haven't heard back from Fran, yet. Wonder who she really is.

As for Allied, last I saw -- while the SEC is now gone, the Justice Department remains actively focused on the company's BLX unit, which was the focus of Brickman's analysis.

P.S.:  Gary Weiss has a good post on his blog deconstructing something Overstock CEO Patrick Byrne was quoted as saying in the New York Times. Byrne, who posts on message boards under the alias, Hannibal, has been saying that CEOs don't give up their first amendment rights. That's true. They should be able to post anonymously anywhere BUT public STOCK message boards about their own companies. Reporters give up the same right.