PhillyInc: Online postings doomed USA Technologies CEO

Posted: October 19, 2011

What ended George R. Jensen Jr.'s tenure as founder, chairman, and CEO of USA Technologies Inc. last week?

About 450 comments on a Yahoo Finance message board that he posted over two months under the alias investor.texas, according to a statement issued Tuesday by the Malvern electronic-payments firm.

USA Technologies said the audit committee of its board of directors received information in late September that suggested Jensen, 62, had been posting information about the company on an online investor board.

With the help of Kroll Inc., an outside consulting firm, the board conducted an investigation and determined the postings, which were usually signed "Tex," were "inappropriate." The company said Jensen admitted writing the messages and was suspended Oct. 5. He resigned Oct. 14.

One posting on Oct. 1 by investor.texas predicted that "USAT will be a hot stock this month." Other comments by the same author take aim at rival posters bashing the penny stock.

Online message boards about public companies have always been akin to the Wild West. In the postings, there is as much chest-thumping over the merits of a stock as pistol-shooting at its shortcomings.

The most famous example of a CEO who took to the message boards was John Mackey of Whole Foods Market Inc. He posted about 1,400 cheery messages about his supermarket chain under an alias for years until his identity was exposed by a Federal Trade Commission review of Whole Foods' proposed acquisition of a rival.

Whole Foods' internal investigation in 2007 determined that the postings had no effect on the company's financial statements. The Securities and Exchange Commission also concluded an inquiry in 2008 without recommending enforcement action. Mackey remains co-CEO of Whole Foods.

USA Technologies is a far smaller and unprofitable public company, with 43 employees and revenue of $22.87 million for its fiscal year ended June 30.

In its statement, USA Technologies said Jensen's postings had no effect on the financial results of the company, which enables debit- and credit-card transactions at vending machines.

In an interview, USA Technologies interim CEO Stephen P. Herbert said he was "sad and disappointed" by Jensen's actions. "It's a regrettable incident limited to the actions of one person," he said.

But the board's response should send "a very strong message to our investors," Herbert said. "The actions of Mr. Jensen and his suspension and resignation don't affect the day-to-day operations of the company."


Contact columnist Mike Armstrong at 215-854-2980 or marmstrong@phillynews.com, or @PhillyInc on Twitter. Read his blog, "PhillyInc," at www.phillyinc.biz.

 

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