WWE investors have been keeping a close eye on the company’s stock today. After news broke that Vince McMahon was being investigated for allegedly paying hush money to keep an affair with an employee quiet, there is a lot of uncertainty in Stamford. It seems as though someone must have known that the story was coming.
Brandon Thurston of Wrestlenomics has reported that 2.1 million shares of WWE stock changed hands yesterday. The average trading volume for WWE stock tops out at about 600,000 per day. The anomaly brings up a lot of questions about who knew what and when.
In a tweet, Thurston pointed out a section of WWE’s code of conduct titled, “Prohibition Against Insider Trading.” Insider trading is an illegal practice that occurs when stock is traded based on information that is not publicly available. While no accusations have been made, that could come into play in the ongoing investigation.
“The term “insider trading” refers to the practice of trading in securities while in possession of material non-public information, a practice which is prohibited under federal law. Any WWE Personnel trading while in possession of material information which he or she has reason to believe is not publicly available is acting contrary to Company policy and may be held liable for insider trading. Directly or indirectly “tipping” this information to another person who trades is also a violation of this policy. Information will be deemed “material” if it would be likely to influence a reasonable investor’s decision to buy, sell or hold securities. Any information about the advances, set-backs or over-all business plan of WWE or its business partners should be considered material. “Non-public” information includes any information that has not been made available to the public through a press release or a filing with the Securities and Exchange Commission. WWE Personnel with information about WWE or its business partners should consider the information “nonpublic” until the second full trading day following the wide-spread disclosure of that information.”
The news about Vince McMahon’s hush money scandal did not break until after the markets closed for the day. That does not meet the test of waiting to trade on the news until the ‘second full trading day following the wide-spread disclosure of that information.’ Without knowing who traded the stocks or why, it’s hard to draw any concrete conclusions.
The mysteriously high amount of trading is suspect. The proper authorities will certainly be interested in finding out more. If insider trading did occur, we may see individuals facing the legal system.
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