NEW YORK (TheStreet) -- The recent share tumble of Green Mountain Coffee Roasters (GMCR) harkens back to the stock crashes of Chesapeake Energy (CHK) and Goldman Sachs (GS) during the financial crisis, and in fact, all the way back to the Great Depression.
That's because in each case the issue of whether top executives and board members should be permitted to use their company stock as collateral for personal investments has been raised. It's a question yet to be answered definitively by the corporate world, even after similar problems first surfaced more than 80 years ago.
The risk of more market implosions triggering margin calls is significant, according to data from Institutional Shareholder Services. Approximately 23% of S&P 500 companies have executives or company officers who have pledged company shares. Only 62.4% of S&P 500 companies have a policy in place prohibiting the hedging of shares by executives.
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