The chief financial officer of Menu Foods Income Fund sold nearly half his shares in the pet food maker less than three weeks before it announced a massive product recall, according to insider trading reports.
The reports show that Mark Wiens sold 14,000 units for C$102,900 (U.S. $89,700) on February 26 and February 27. As of Monday’s close of C$4.46, the units would be worth C$62,440.
After the sale, Wiens owned 17,193 units and had options to buy 101,812, the trading reports show.
On March 16, the Mississauga, Ontario, pet food maker recalled 60 million containers of “cuts and gravy” style pet food amid reports of pet deaths due to contamination.
The U.S. Food and Drug Administration has identified an industrial chemical called melamine in wheat gluten it said was shipped by a Chinese company to ChemNutra Inc. of Las Vegas. ChemNutra then sold the ingredient to Menu Foods and a few other companies that have since recalled pet products.
Wiens was not available for comment, but company spokesman Sam Bornstein said on Tuesday “there was no link whatsoever” over the timing of the trades and the pet food recall.
“This is a guy who conducts himself to the highest ethical and moral standards and he wouldn’t do anything to imperil the high governance standards that he demands of himself and the company,” said Bornstein. “In fact, to do so would compromise his ability to make a living.”
Wiens told the Globe and Mail newspaper in an interview published on Tuesday it was a “horrible coincidence” that he sold nearly half his units before the pet food recall.
He added he did not hear of any possible problem with the company’s products until early March. Wiens also told the newspaper that the Ontario Securities Commission, Canada’s senior equities watchdog, had not approached him over the timing of the trades.
Menu Foods’ president and chief executive, Paul Henderson, said at a press conference late last month that Menu Foods had stopped using its Chinese supplier of wheat gluten on March 6.
Last week, the company expanded its recall to include products made between November 8 and March 6, and 27 more varieties sold in the United States, Canada and Europe.
Units of Menu Foods were down 9 Canadian cents, or 2 percent, at C$4.37 on the Toronto Stock Exchange by midafternoon, and off about 40 percent since the recall.