Volcom Discloses Chairman’s Deal
Volcom Inc., the Costa Mesa youth apparel company that hopes to raise about $86 million in an initial public stock offering, said in a regulatory filing that nearly 30 years ago Chairman Rene Woolcott settled allegations of insider trading.
The document said Woolcott was prohibited from further violations of certain provisions of the securities laws and surrendered $6,500 that represented profit he received from the purchase and sale of securities while allegedly in possession of “material, nonpublic information.”
Woolcott, father of Volcom Chief Executive Richard Woolcott, neither admitted nor denied the allegations, according to the document, filed Thursday with the Securities and Exchange Commission.
News accounts from Aug. 20, 1975, said the SEC filed suit in U.S. District Court in Washington, asking that Rene Woolcott disgorge $6,500 he allegedly gained by selling 1,000 shares of Zapata Corp. Associated Press identified Woolcott as a director of Zapata, a Texas oil firm founded by future President George H.W. Bush.
Neither of the Woolcotts could be reached for comment. Both have said they were observing the “quiet period” that precedes an IPO.
Jacob Frenkel, a former SEC enforcement lawyer and former federal prosecutor, said the company was not legally obligated to disclose the matter.
“People are not going to decide whether to buy this offering based on a 30-year-old insider-trading case,” said Frenkel, now a partner at law firm Shulman, Rogers, Gandal, Pordy & Ecker in Rockville, Md. “But in the interest of complete and full disclosure and total transparency, it is certainly a prudent disclosure.”
SEC spokesman John Nester, although he would not comment on the Volcom filing, said: “Companies are required to disclose information that reasonable investors need to know to make informed investment decisions.”
Rene Woolcott, who is also chairman and president of privately owned investment firm Clarendon House Advisors Ltd. in Newport Beach, pitched in $5,000 to help launch Volcom 14 years ago, according to the company’s website.
Volcom, which built its business by appealing to surfers, skaters and snowboarders, has developed a strong following among Southern California youth.
The company’s items are in 2,900 stores in the United States, including its own shop on La Brea Avenue in Los Angeles.
Last year, Volcom generated net income of $24.6 million on sales of $113.2 million. In the quarter ended March 31, profit rose to $6.3 million from $3.2 million in the same period a year earlier, Thursday’s SEC filing said. Sales increased 49% to $31.7 million.