A senior US executive decided to offload millions of dollars-worth of stock in his own company, just two weeks after it began delivering the controversial UK government contract to assess disabled people’s fitness for work.
Maximus took over the £595 million contract to provide hundreds of thousands of work capability assessments every year from the much-criticised outsourcing giant Atos on 2 March, but had been already working alongside Atos on the contract for several months.
And just two weeks after taking over the contract, on 17 March, Maximus president Bruce Caswell submitted plans to sell 120,000 shares in the company over the next few months.
There is no suggestion of any wrongdoing on the part of Caswell or Maximus, and the process is entirely legal according to US law, while Caswell is believed to continue to hold a substantial shareholding in Maximus.
Maximus has made it clear that the timing of the sale was a “coincidence” but it is still likely to be an embarrassment to government ministers in the UK who had hoped the company would improve on the performance of Atos, which became a focus for angry protests after the tests were introduced in 2008 by the last Labour government.
According to the schedule prepared for the US authorities by Caswell, 100,000 of these shares were stock options, originally awarded in 2005 and due to expire in October 2015 if he did not take advantage of the chance to buy them at a fixed price far below the current stock market valuation.
But there was no reason why Caswell could not have kept hold of those shares once he had bought them.
Instead, he told the US Securities and Exchange Commission that he planned to sell all 120,000 shares in stages over the following seven months. The sale is likely to have made him more than $5 million.
It appears that the final 20,000 shares were sold on 7, 8 and 9 October – in line with the pre-agreed trading plan – just five weeks before the company announced its results for the financial year ending September 2015.
Those results revealed that Maximus had so far made a $4 million loss on the WCA contract, leading to its share price falling 26 per cent in two days.
In a presentation on the day the results were announced, 12 November, Caswell and other senior executives spent much of their time explaining why their performance on the WCA contract – which has seen Maximus missing targets for carrying out assessments – had been so much poorer than expected.
They explained that Maximus had been finding it difficult to recruit enough doctors and nurses from the NHS willing to carry out the assessments.
A Maximus spokesman said: “Executive share transactions can only take place during specified times during the year.
“There is no opportunity for those disposing of shares to do so outside of these time periods.
“This particular sale order was directed under a Rule 10b5-1 trading plan that was filed with the Securities and Exchange Commission on March 17 2015 which was over seven months ahead of our recent earnings announcement.
“All executive share sales take place in strict accordance with Securities and Exchange Commission rules including those governing insider trading.”
He stressed that it was “absolutely” just a coincidence that Caswell had filed the plan just two weeks after Maximus took over the contract from Atos.
A Department for Work and Pensions spokeswoman said: “We feel it is not appropriate for us to comment on this as it is a commercial issue for Maximus.”
When Maximus took over the WCA contract, it was greeted with more than 30 protests across England, Scotland and Wales, with activists pointing to its lengthy record of discrimination, incompetence and alleged fraud in the US.
They said then that the replacement of one “toxic” profit-seeking company with another would make no difference to those disabled people being assessed.
Pictured: The entrance to Maximus’s London offices
