eBay (NASDAQ:EBAY) stock closed down 1.5% Friday on news that the e-commerce market will have to pay a $3 million criminal penalty for harassment and intimidation on the part of several company executives. Indeed, the executives sent a bloody pig mask, live insects, and a funeral wreath to a Massachusetts couple as recompense for some unkind online coverage of eBay, according to the Department of Justice.
“eBay engaged in absolutely horrific, criminal conduct. The company’s employees and contractors involved in this campaign put the victims through pure hell, in a petrifying campaign aimed at silencing their reporting and protecting the eBay brand,” noted Acting U.S. Attorney Joshua S. Levy in a statement.
From 2019 to 2020, Jim Baugh, eBay’s former Senior Director of Safety and Security, alongside six other employees, made targeted harassment attempts toward the couple after the pair published a pointed newsletter about issues of interest to eBay sellers, according to the DOJ.
Indeed, eBay executives became upset at the tone and subjects of the newsletter, in addition to the comments underneath the newsletter’s articles, the DOJ said.
Upon discovering the police investigation into the harassment, Baugh made false statements to the police and, along with his team, deleted digital evidence of the campaign.
eBay Stock Sinks on DOJ Charges
eBay has since terminated all employees associated with the harassment campaign.
“The company cooperated fully and extensively with law enforcement authorities throughout the process. EBay does not tolerate this kind of behavior. eBay apologizes to the affected individuals and is sorry that they were subjected to this. EBay holds its employees to high standards of conduct and ethics and will continue to take appropriate action to ensure these standards are followed,” the independent special committee formed by eBay’s board of directors to oversee the company’s investigation wrote in a statement.
Per the DOJ, eBay has also agreed to retain an independent corporate compliance monitor for three years, and improve its compliance process.
Seven eBay employees were convicted for the harassment campaign, including Bough, who was sentenced to 57 months in prison in September 2022.
Unfortunately, the news only adds flames to the fire that is EBAY stock. Indeed, the company has trended well in the red the past year, even as the S&P 500 and Nasdaq Composite enjoy strong gains. While the $3 million charge itself shouldn’t be much of a financial burden for the company, the damage done to its reputation may do the trick.
“It also puts in place some much needed checks and balances to ensure an overhaul of eBay’s corporate culture,” noted Jodi Cohen, special agent in charge of the Federal Bureau of Investigation Boston Division, referencing Thursday’s settlement.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
