Greif denies insider trading charge in SEC filing
Company also accused of violating reporting rules
Greif Inc., an industrial packaging giant, issued a statement Tuesday saying that two members of its board, including the chairman, deny they engaged in insider trading.
The company also said it fully complies with federal financial reporting requirements.
Greif and its board members were accused of violating reporting rules and insider trading laws by a whistleblower who had been working as a safety consultant for one of its subsidiaries and saw unsafe conditions in its chain of barrel reconditioning plants.
Board chairman and former CEO Michael Gasser and member Daniel Gunsett sold shares in Greif in December 2016, shortly after the company learned a Milwaukee Journal Sentinel investigation into safety issues
in a chain of barrel refurbishing plants would soon be published.
Gasser sold 20,000 shares, or 10% of his holdings, for just over $1 million, SEC records show. Gunsett sold 3,800 shares — 15% of his holdings — for $206,000. Neither had sold shares in the company since 2014, records show.
The Journal Sentinel reported in an article over the weekend on a complaint alleging insider trading filed with the U.S. Securities and Exchange Commission by the whistleblower in the case.
Sen. Tammy Baldwin (D-Wis.) wrote a letter to the agency asking for an investigation into that complaint and a second by whistleblower Will Kramer accusing Greif of misleading investors by failing to disclose the extent of the company’s environmental risks.
In a statement filed to its file on the SEC website, Greif says it “categorically denies” the allegations. The statement acknowledges the company was contacted in December by the Journal Sentinel regarding the coming investigation.
But the $3.3 billion-a-year company says it was not aware of the full extent of the investigation. Gasser and Gunsett say they didn’t know about it, the statement said.
“The two individual directors deny having knowledge of any such potential article at the time of their transactions,” it said.
The company also says it has fully complied with SEC disclosure requirements.
“The company’s advisers, who are aware of the facts regarding the facilities and understand the company’s overall financial condition and performance, have concurred with this conclusion,” it said.
The company was contacted last week for comment on the allegations. A spokeswoman provided a statement, which was in the article, saying “any suggestion that Greif did not provide fair and accurate financial statements as required by the SEC is absolutely untrue and absurd.”
On the insider trading allegation, the company said efforts should be made to verify that before publication. Gasser and Gunsett did not return messages for comment.
Kramer, the whistleblower, said that after learning of the coming Journal Sentinel investigation, “executives at Greif either felt this was not important enough
to inform its board of directors, or they’re lying about doing so.”
“Either way,” he said, “the company’s shareholders, its workers, and the community members put at risk by the company’s actions deserve answers.” Kramer included the statement in an email sent Tuesday.
An SEC spokesman has declined to comment on the complaints or Baldwin’s letter.
The Journal Sentinel investigation, published in February, uncovered a host of problems that endangered workers and residents living near the facilities, which are operated by Container Life Cycle Management (CLCM), a joint venture majority owned by Greif.
There are CLCM plants in four states: Wisconsin facilities in St. Francis, Milwaukee and Oak Creek, as well as operations in Arkansas, Indiana and Tennessee.
The plants refurbish 55-gallon steel drums and large plastic chemical containers, cleaning them for reuse or recycling. The three Milwaukee-area plants operate as Mid-America Steel Drum.
Workers at the plants said chemicals were routinely mixed together, triggering dangerous reactions that resulted in chemical and heat-related burns, injuries from exploding barrels, breathing difficulties and other health problems.
Reporters contacted employees from CLCM and Greif in early to mid-December regarding the investigation. The stock sales by Gasser and Gunsett occurred Dec. 20 and 21, records show.
Following the Journal Sentinel publication, federal and state regulators launched a broad investigation into safety at the plants. The probe has now expanded to 13 facilities in nine states.