Sally’s Beauty Supply Detected Attempt at Data Breach; Wall Street Journal Reports Beauty Supply Company CEO’s Sale of Millions in Stock “Preceded Disclosure that the Retailer is Probing an Attempted Data Breach”

In the wake of The Wall Street Journal reporting that Sally’s Beauty Supply was investigating an attempt at a data breach of its customers (“Sally Beauty Detects Attempt at Data Breach,” March 6, 2014) comes a follow-up story that the company’s CEO sold $16.2 million in stock shortly before the retailer announced the investigation to the public. “Sally Beauty’s CEO Sold Stock” (The Wall Street Journal, March 8-9, 2014) reports how CEO Gary Winterhalter, 61, cut his holdings in the company by about a third in the last month – about $13.4 million in stock and vested options last month and an additional $16.2 million in company stock the first week of March. “None of the most recent sales were prearranged under the typical automatic-trading agreements that executives use to insulate themselves from insider-trading concerns,” the March 8-9 story reports in The Wall Street Journal. The story went on to say that the sales were part of the CEO’s “estate-planning strategy and were unrelated to the attempted data breach or concerns about the chain’s performance.” The beauty supply chain operates more than 2,700 U.S. stores. “Mr. Winterhalter’s February stock sales occurred before the company knew about the attempted data breach,” the company said, according to The Wall Street Journal story. The company said it has hired the computer forensics unit of Verizon Communications Inc. to investigate the attempt to breach its data system. Company representatives said they noticed unusual activity Feb. 24 this year but as yet has not reported any evidence that payment card or consumer data was taken.