CEO Stock Pledges: Souki, Moore, Ghamsari, Garrabrants, and Others

In a world where financial success can quickly turn to ruin, three high-profile CEOs have found themselves in a precarious position after being forced to sell their slumping US-listed shares. The root of their downfall? Pledging their shares as collateral for personal loans, a risky practice that has seen a surge in popularity in recent years.

The first CEO to feel the sting of this practice is Charif Souki, co-founder of Tellurian Inc. Once America’s best-paid executive, Souki saw his fortunes take a nosedive when lenders seized 25 million shares of Tellurian that he had pledged in 2017 to secure loans for real estate investments. The shares, valued at $250 million at the time of the pledge, were sold for a mere $37 million after Tellurian’s stock hit a three-year low. This forced sale left Souki with a stake of less than 1% in the company and ultimately led to his ousting as chairman and the stripping of all his executive roles.

Andy Moore, CEO of B. Riley Financial Inc., also found himself in hot water when his broker sold $1.3 million worth of shares in November after a margin call. The financial services firm had recently reported a large quarterly loss and was facing scrutiny over its involvement in the buyout of Franchise Group. Moore’s forced sale came at a time when B. Riley’s stock hit a three-year low, compounding the financial pressure he was already under.

Nima Ghamsari, CEO of Blend Labs Inc., rounds out the trio of CEOs caught in the fallout from pledging shares. Ghamsari offloaded about $1.5 million of stock in the fintech company through trading plans since the start of last year. Like Souki and Moore, Ghamsari had pledged most of his stake to an undisclosed lender, with the latest sale occurring in January. Blend Labs has seen its stock drop by 88% since its 2021 IPO as it struggles to turn a profit, highlighting the risks associated with pledging shares in a volatile market.

The practice of pledging shares has become increasingly popular among US executives looking to access cash without reducing their stake in the company. Larry Ellison, chairman of Oracle Corp., has famously used this strategy to fund his lavish lifestyle, while others, like Mat Ishbia of UWM Holdings Corp., have leveraged their stock to secure loans for major purchases, such as buying an NBA team.

However, the risks associated with pledging shares have become all too apparent in recent years. As interest rates rise and stock values fluctuate, executives who have pledged their shares can find themselves in a precarious position, forced to sell at a loss when their stock hits multiyear lows. This can have a devastating impact on their personal wealth and their standing within their respective companies.

As the fallout from these forced share sales continues to unfold, it serves as a stark reminder of the dangers of leveraging personal assets for financial gain. For these three CEOs, the road to recovery may be long and arduous, but it serves as a cautionary tale for others who may be considering similar financial maneuvers in the future.

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