Independent Stock Analyst Admits to Threatening CKE

A stock analyst admitted in federal court in St. Louis on Thursday that he threatened to damage the reputation and stock of CKE Restaurants Inc. if the Carpinteria, Calif., company didn’t hire him as a consultant for $300,000.

C. Clive Munro, 54, pleaded guilty to committing interstate threats. As part of a plea deal, prosecutors agreed to drop felony charges of extortion, wire fraud and securities fraud.

Munro, arrested in October at his Cheyenne, Wyo., home, faces up to two years in prison and $250,000 in fines when sentenced May 12. CKE is the parent of several fast-food chains, including Carl’s Jr. and St. Louis-based Hardee’s.

Beginning in April 2003, Munro, an independent stock analyst, pressed CKE Chief Executive Andy Puzder and Chief Financial Officer Ted Abajian to hire him as a consultant for $25,000 a month for a year. After he was rebuffed, Munro issued a negative report in August 2004 suggesting that the company’s “slowing growth” could lower the stock price and that investors should sell their shares.

That caused a substantial drop in the company’s stock price, wiping out $160 million in market value. The stock has since recovered.

On Sept. 15, Munro sent an e-mail to at least one client with another negative analysis, then followed up with an e-mail to Puzder, prosecutors said.

“Hi, Andy,” prosecutors said it read. “If you were smart, you would hire me at $25K per month for 12 months (for half my time) and take me out of the game. Plus, you would have vastly improved your relations with investors, and you might have avoided some of the current problems with Hardee’s. So far this year, this would have saved you $160 million in lost market value.... Clive.”

CKE executives alerted authorities, and the FBI taped conversations in which Munro said he would stop writing negative reports in exchange for money.