KLA Corporation, an AI semiconductor company, has seen its stock drop 40% since June 30 while executives and other insiders disclosed more than $64 million of stock sales in filings with the US Securities and Exchange Commission, according to Protos.
Shares fell from a record high as market value shrank by more than $160 billion
KLA shares reached an all-time high of $307.37 on June 30. The stock closed at $183.77 yesterday. Protos said that move corresponded with a market capitalization decline from $401 billion to $240 billion, a loss of more than $160 billion.
The report said the insider sales did not all take place after the 40% drop had already happened. Each transaction occurred on a separate date and at a separate price during the slide.
Named executives accounted for the disclosed sales
President Richard Wallace sold $17.4 million of stock. Chief Financial Officer Bren Higgins sold $13.9 million. Executive Vice President Brian Lorig and Officer Mary Beth Wilkinson each sold more than $12 million. President of Semiconductor Products Ahmad Khan sold $6.6 million, and Senior Vice President Virendra Kirloskar sold $1.8 million.
KLA has said that most of these sales followed regularly scheduled trading plans tied to executive compensation packages. Over the same period, however, no insider disclosed an open-market purchase.
Most filings referenced Rule 10b5-1 plans
Protos said the vast majority of the sale transactions carried a Rule 10b5-1 representation. Those qualifying trading plans must be put in place in advance and operated under the rule’s conditions, and they can provide a defense against potential insider trading liability.
The filings do not prove that KLA insiders foresaw a decline in the stock price. Protos also noted that the absence of buying is not proof that KLA is overvalued, and planned selling is not proof that insiders held a bearish view. Still, the report said a pattern of selling with $0 of buying could leave some investors uncomfortable.
Latest filing entered EDGAR on August 14
The newest insider trading filing mentioned in the report reached the SEC’s EDGAR system on August 14 and covered a sale dated August 13. Protos added that later August trades might not yet have appeared in EDGAR, even though public companies are required to disclose insider transactions promptly.
Under SEC rules, a Form 4 for a qualifying insider trade is due before the end of the second business day after the trade date.
Protos also gave a simple illustration of the stock’s decline: a $10,000 purchase made at the June 30 high would now be worth less than $6,000.