Cross Posted at Legal Schnauzer
A Wall Street analyst says she was unaware that Campus Crest Communities CEO Ted Rollins has been convicted for an assault on his stepson and investigated for possible child sexual abuse of the same stepson.
"Oh, my God, I was not aware of any of that . . . ," Paula Poskon said. "It certainly sounds like I need to do a lot more digging."
Poskon is a senior research analyst at Robert W. Baird and Co., which is one of about six underwriters on the $380-million IPO that Campus Crest Communities completed in late 2010.
In his role as CEO, Rollins markets student housing to young people and their parents. So it is grimly ironic that he has a history of abusive actions toward young people. That irony was not lost on Paula Poskon. "That's what makes this so concerning," she said.
How much did Wall Street investors and analysts know about Ted Rollins' background before supporting his company to the tune of several hundred million dollars? Well, Poskon said quite a few of them knew about the nasty nature of his divorce case, which was unlawfully completed in Shelby County, Alabama, even though it started and was litigated for three years in Greenville, South Carolina.
Poskon said concerns about the divorce case were strong enough that she asked Rollins about it--and he apparently supplied answers that she found satisfactory. But based on the conversation I had with her, it sounds like Poskon might be rethinking that.
Do investors care only about making money, or do they also care about the personal activities of those who run public companies? Is a conviction for assault and an investigation for possible child sexual abuse enough to give investors pause?
Here is how Poskon addressed those questions: "I think the broad question you're asking is: Hypothetically speaking, in any public company CEO situation, where a CEO was accused or convicted of these kinds of things, how concerning would that be to investors? The answer is it would be very concerning."
We have much more coming on Paula Poskon's reaction to news about troubling events in Ted Rollins' background. Ms. Poskon deserves credit for being willing to take questions about Ted Rollins and Campus Crest. We've already shown that Vick Seth of Raymond James, the chief underwriter on the Campus Crest IPO, ran for cover when confronted with such questions.
Meanwhile, recent reports indicate that investors do care about ugly events in a CEO's background. Ryan Petersen resigned on September 17 as CEO of OCZ Technology, a Silicon Valley company that is a leader in solid-state storage technology. Petersen founded OCZ, and the company is on the leading edge of a computing transition from hard drives to solid-state drives (SSDs).
The Petersen story speaks to the power of the non-traditional press. A story broke in April 2011 on seekingalpha.com that Petersen and the company's underwriters had failed to disclose information about the CEO's criminal record. The story specifically broke with Copperfield Research, a contributor at the Seeking Alpha site, and then made its way into the mainstream business press.
A little more than a year later, Ryan Petersen is out as CEO. Could a similar fall be in Campus Crest Communities' future? It's probably too early to say. But it does appear that Ryan Petersen and Ted Rollins have some unpleasant characteristics in common. How similar are they? For that, we need to learn more about Ryan Petersen. And that is coming in our next post.