Shady dealings at Coach, Crocs?

It's no secret that retail stocks have been suffering as of late, given the poor October results many experienced (I alluded to this in my last blog post). But an article in the New York Times' business section points out that a lot of insider trading has been going on at both Coach and Crocs. Is something shady going on? Consider the following:

Crocs and Coach have been treading a similar path in recent weeks, with both falling sharply after disappointing Wall Street when they announced their latest earnings. The trajectory of Crocs has been especially sharp, plunging 50 percent since the end of October after more than tripling this year. That’s not the only similarity; in both cases, the drop was preceded by heavy selling among corporate officers and directors, including top executives. At Crocs, insiders dumped more than $176 million worth of their shares this year while Coach officers sold $57.2 million.

The last sale by Keith D. Monda, Coach’s president and chief operating officer, took place Sept. 19, when he unloaded 50,000 shares at $50.64, netting $2.5 million.

While Coach claims that their executives were merely diversifying their portfolio, the Times asserts that "none of the officers and directors at either company have bought a single share on the open market this year." Crocs did not make any official comments in this story.

So the question is, were executives like Monda trading on industry knowledge, which is legal, or inside company knowledge, which is not? A Coach spokesperson said in the piece that its CEO still owns 9.83 million shares, options and restricted stock units, and what he sold in stock was small compared to his overall holdings.

Regardless, it seems that, on the whole, moves by Monda and other company executives have preceded major moves (both ways) in Coach's stock:

For Coach, the first quarter of 2007, with $41.5 million in insider sales, was the heaviest for such sales in the last five years, says Mark A. LoPresti, vice president for proprietary research at Thomson Financial. That was shortly before Coach hit a record high of $54.

I smell an SEC investigation in Coach's future. Maybe Croc's too.