SEC Eyes Man Of The Year

Recent Bankruptcy Speculation Has Punished Amazon Stock

(CBS)  The Securities and Exchange Commission is investigating stock sales by Amazon.com chief executive Jeff Bezos just before a negative report on the company was released, The New York Times reports.

Documents filed with regulators on Feb. 2 and Feb. 5 indicated that Bezos - named Time magazine's 2000 Man of the Year for his dotcom ventures - intended to sell 800,000 shares of Amazon stock worth roughly $12 million.

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A week earlier, Amazon executives received an advance copy of a research report compiled by Lehman Brothers that questioned the company's ability to continue operating through 2001.

The report also speculated that Amazon's deteriorating financial situation could subject it to a credit squeeze later this year.

Bill Curry, a spokesman for the Internet retailer, said Bezos had sold the stock in an effort to generate capital and diversify his holdings and that it had nothing to do with the Lehman report.

“There was nothing new in the report, and indeed the stock went up that day after the report was released because there was nothing new in it,” Curry told the Times.

The sale also fell within a trading window in which executives would be allowed to divest their shares, Curry said.

It is not clear how many shares Bezos sold because SEC filings only indicate an intention to sell.

At the end of February, Amazon vigorously denied market rumors that the company was planning to file for bankruptcy - and shares of the company have taken a beating in recent weeks.

At the time, a spokeswoman for the company said that the rumors of Amazon's demise were untrue.

"I have no idea where this rumor is coming from," spokeswoman Patty Smith said. "I can tell you absolutely, positively that there is no truth whatsoever (to the rumor). I'm here to tell you it's not true."

The rumors apparently were sparked by a short story early Wednesday on German business news wire VWD, which said the speculation about an Amazon bankruptcy filing was coming from the U.S.

At the time, Curry said the company started the year with $1.1 billion in cash, and expects to finish the year with nearly all of it on hand.

"We've got piles of moolah," he said.

To win an insider trading case, the government would have to prove that Bezos acted improperly on information that had a material effect on the company's stock but was not publicly available. Security lawyers also told the Times that a case of insider trading might be difficult to prove because shares actually rose more than 9 percent on the day the report was released.