Insiders, Like Small Investors, Suffer Margin Calls
Jaap van der Meer was in a bit of a box.</br></br>The Alpnet Inc. president needed cash to exercise 150,000 stock options this summer, but didn't want to sell any of his Alpnet shares, worried that it would send a negative signal to investors. So he borrowed against his roughly $3.2 million stake in the Salt Lake City multilingual information-services firm.</br></br>As the head of a company, "you're almost like a celebrity," says Mr. van der Meer. When a senior executive sells shares, he adds, "it never looks very good."</br></br>Neither, in hindsight, does his decision to borrow. After he took out the loan, Alpnet stock sank 40% on the Nasdaq Stock Market, and Mr. van der Meer was forced to dump the 150,000 shares he had exercised when the stock was trading at about $2.30. He sold, or planned to sell, most of those shares at prices ranging from 73 cents to $1.31, according to Securities and Exchange Commission filings. Mr. van der Meer says the sale was triggered by a "margin call," a demand that he come up with additional cash or stock. He still holds 1.2 million Alpnet shares valued at $712,500. In February, his Alpnet stake was valued at $14.2 million.</br></br>At the time of the loan, "we felt, `our company is doing well and the stock market will reflect that,' " says Mr. van der Meer. But, he laments, "markets are unpredictable and irrational."