The return of the margin call at Boston Scientific…

November 12, 2009

It’s been a little over a year since we last saw a margin call at Boston Scientific. But on Monday and again on Tuesday, we spotted two Form 4s filed by one of the company’s co-founders, Peter Nicholas, who is also a director.

On Nov. 5, Nicholas sold 250,000 shares of company stock and the following day, he sold another 150,000 shares. Both forms cite the reason as being an involuntary sale. Here’s a snip from the filing:

The transactions reported on this Form 4 represent the involuntary sale of Boston Scientific common stock by an unaffiliated commercial bank. These shares were previously pledged by the reporting person to collateralize a loan for a limited partnership of which the reporting person is a general and limited partner.

Last fall, when Boston Scientific stock was dropping sharply, Nicholas and fellow co-founder John Abele sold off over 30 million shares of stock as the result of margin calls. Earlier this year, both men sold millions more worth of the stock.

Since the initial sharp drop last fall, Boston Scientific stock has continued to stagger, which explains the additional margin calls. The sales were made at $7.93 to $8.13 a share. The stock is currently trading at $8.34.

According to the filing, Nicholas continues to own just over 10 million shares of stock and another 14.5 million via a trust and a family partnership, so he’s not exactly tapped out. Still, being forced to sell stock instead of doing so voluntarily can rarely be viewed as a positive thing.

UPDATE 8:45 pm: Just after the market closed, Nicholas filed two more Form 4s (see here and here) that another 350,000 shares of Boston Scientific had been sold as a result of a margin call. The sales, which were executed on Nov. 10 and 11, fetched between $8.09 and $8.28 a share. The stock closed at $8.19 on Thursday.

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