Richard Helppie, a director of the newly public company, didn't comply with corporate-insider-trading rules when he sold shares of drkoop.com (Nasdaq:KOOP) shortly after the company's initial public stock offering in June, the firm concedes.
Helppie bought 400 shares of drkoop.com June 8 at $16.44 each, according to Primark, a Boston concern that monitors insider activity. He sold the same number of shares June 11 at $16.63 each. Sue Georgen-Saad, chief financial officer, said Helppie has already returned the $76 in profits to the company. Helppie still holds more than five million shares, according to drkoop.com's June 7 registration statement with the Securities and Exchange Commission.
In addition, the company's founder and namesake, C. Everett Koop, failed to file the required forms disclosing indirect purchases of stock on the day of the IPO.
Neither slip-up appears to be egregious or involves big sums of money. But such problems with IPO rules are uncommon.
These problems were disclosed after what the company says was a "full-scale investigation" of stock-sales rules compliance in the wake of the acknowledgment by ABC-TV medical correspondent and drkoop.com director Nancy Snyderman that she ran afoul of securities laws when her husband sold shares of the drkoop.com IPO only a month after the IPO.
Dr. Snyderman also has returned to the company the profits made from that transaction.
Drkoop.com says it discovered in its investigation that a number of insiders, including Dr. Koop and Ms. Georgen-Saad, failed to file the required forms on the 10th day of the following month after an insider buys or sells company stock. The drkoop.com insiders indirectly purchased the stock June 8, but failed to file the forms until Aug. 27. Companies must disclose and identify any late filers on their 10-K reports, an SEC spokesman said.
Ms. Georgen-Saad said the company discovered Helppie's miscue -- as well as her own -- as a result of the investigation that was intended "to make sure we didn't have any other problems" after the problems with Dr. Snyderman's transactions surfaced. The Austin, Texas, company spoke with its board members and made sure everyone understood and followed the compliance steps for stock sales, Ms. Georgen-Saad added.
The stock sales by both Dr. Snyderman and Helppie violated a federal securities statute that bars corporate officers and directors from profiting from a stock sale within six months of purchasing shares. Helppie violated the "shortswing-profit rule" because just three days had passed between the purchase and sale of the shares.
The sale also broke drkoop.com's "lockup" agreement with the IPO's Wall Street underwriter, Bear Stearns Cos., which restricts insiders from selling their IPO shares right after the offering.
Unlike Dr. Snyderman, Helppie had experience dealing with the rules surrounding stock sales by a corporate insider. Helppie is chairman and chief executive of Superior Consultant Holdings Corp., a health-care-consulting firm in Southfield, Mich. He sold 750,000 shares of Superior Consulting in November 1997, over a year after the company went public, according to Primark.
Calls to Helppie's office this week were referred to a spokeswoman for Superior Consultant, who hasn't returned several phone calls.