Federal regulators have recommended dropping an investigation into stock sales by two top Molson Coors Brewing Co. executives, the company said Tuesday.
The sales were made about a week after a Feb. 9 merger was completed between Golden-based Adolph Coors and Montreal-based Molson.
Regulators launched an investigation after the merged company released its first earnings report in April and the stock plunged 19 percent.
Molson Coors chief executive Leo Kiely and chief financial officer Timothy Wolf sold stock after the merger closed but before the negative-earnings surprise. Kiely and Wolf pocketed more than $1.6 million from the sales, SEC documents show.
In a document filed with the Securities and Exchange Commission, Molson Coors said SEC staff recommended the commission terminate the investigation without taking enforcement action. SEC assistant regional director Mary Brady informed the company about the recommendation in a letter Nov. 14.
Brady said she couldn’t comment on the letter, which was included in the SEC filing. But the letter says termination of the investigation should not “be construed as indicating that the party has been exonerated or that no action may ultimately result from the staff’s investigation of that particular matter.”
That reference is “ordinary careful lawyering,” said Ted Fiflis, a securities-law professor at the University of Colorado at Boulder.
“I don’t think they have any notion that they have anything else to learn, but they don’t want to waive anything that they don’t know about yet,” he said.
Molson Coors spokesman Paul de la Plante said the company is glad to have the investigation behind it: “We are extremely gratified that the matter has come to a conclusion.”
Some investors sued the company, alleging its leaders misled Wall Street about a decline in business prior to the merger. A decision by the commission to close out the investigation on Kiely and Wolf won’t have any effect on the lawsuits, Fiflis said.
After the merger, Molson Coors reported a first-quarter loss of $46.5 million. It attributed the loss to weak sales and severance pay for departing executives.
Analysts had anticipated a profit, and the results caused the stock to drop $14.30, 19 percent, to $63.
In June 2005, the company said the SEC had requested documents related to Molson Coors’ first quarter and the $3.4 billion merger that created the company. The SEC’s move came on the heels of the investor lawsuits.
Last month, the company said that after a 12-month investigation, its audit committee had found no merit to a complaint about the sales and other matters.
Molson Coors stock closed Tuesday at $70.29.
Staff writer Tom McGhee can be reached at 303-954-1671 or tmcghee@denverpost.com.
