New York (CNN Business) – A half-dozen AMC executives are cashing in on the “stock meme” craze.
Four AMC executives and a pair of directors dumped more than $8 million worth of stock last week, according to regulatory filings.
The stock sales came as shares of the world’s largest movie theater chain soared, largely because it is a favorite of traders who follow Reddit site WallStreetBets.
AMC (AMC) surged 83% last week alone, building on a 116% gain the previous week. And AMC surged another 15% on Monday, giving the stock a stunning gain of nearly 2,500% in 2021. And the year isn’t even half over.
Cornell Law School professor Charles Whitehead said he doesn’t think the stock sales, which Business Insider previously reported on, raise any legal concerns.
“Given what’s going on with AMC stock, I’d be more surprised if they didn’t sell,” Whitehead said.
Stock price grossly inflated
Records show Carla Chavarria, AMC’s human resources director, sold 40,346 shares last week and raised $2.5 million. Chavarria still owns more than 44,000 AMC shares, records show.
The three other AMC executives sold last week were John McDonald, executive vice president of U.S. operations; Daniel Ellis, senior vice president of development and international; and Elizabeth Frank, chief content officer.
Former U.S. Commerce Secretary Gary Locke, who has led AMC since February 2016, sold $1.7 million worth of AMC stock last week, records show. That represented more than half of Locke’s holdings in AMC. Anthony Saich, another AMC director, sold shares worth more than $600,000.
AMC did not respond to requests for comment on the stock sales.
Not only executives, but AMC itself has been divesting its shares. AMC itself sold 11.5 million shares last week, raising $587 million.
“AMC is using this opportunity to take advantage of what they believe is a very inflated share price,” Whitehead said.
In fact, the company’s stock sale last week included an unusual caveat. “Under these circumstances, we caution you not to invest in our Class A common stock unless you are willing to risk losing all or a substantial portion of your investment,” AMC wrote in a filing.
SEC on high alert
Meanwhile, the Securities and Exchange Commission said Monday it is watching for manipulative trading and other misconduct amid the rise of AMC, GameStop (GME) and other meme stocks.
“The SEC staff continues to monitor for market disruption, manipulative trading, or other misconduct given the current volatility in certain securities,” the agency said in a statement.
“We will act to protect retail investors when violations of federal securities laws are identified,” regulators added.
At the same time, SEC Chairman Gary Gensler is calling for new restrictions on pre-arranged executive stock trading plans, known as 10b5-1 plans. (AMC executives do not appear to have used 10b5-1 plans for these trades.)
During an appearance at the Wall Street Journal’s CFO Network event Monday, Gensler said he wanted to review existing rules to reduce the risk of improper insider trading.