A former executive with children’s apparel maker Carter’s has been accused by federal prosecutors of a criminal insider trading scheme that allegedly involved tipping off a Wall Street analyst about the company’s moves.
Eric M. Martin, 42, of Roswell, a former head of investor relations for Carter’s, allegedly provided privileged information to a Wall Street analyst who bought or sold Carter’s stock based on those tips.
“Instead of safeguarding this inside information, he was using it to make illegal profits in the stock market and tipping others so that they could do the same,” U.S. Attorney Sally Quillian Yates said in a news release.
Wednesday’s indictment alleges Martin, among other things, disclosed information in advance of Carter’s acquisition of Oshkosh B’Gosh. The unnamed analyst used that information to short the acquisition target’s stock, and made large profits when the merger was announced. Federal prosecutors also allege Martin used the privileged information in his own stock trades.
Martin already faces a civil complaint from the Securities and Exchange Commission filed in August that accused him of using internal information about the company to avoid losses or make profits on improper trades. That case is pending.
The criminal charges include conspiracy and multiple counts of securities fraud and wire fraud.
An attorney for Martin declined comment. In a response filed in the SEC case, which did not include allegations of tipping, Martin’s attorney is seeking dismissal. He called the cited trades legitimate trading activity and said Martin didn’t improperly use privileged information.
This is the latest in a string of criminal or civil actions against former insiders of Carter’s.
The U.S. attorney’s office opened an inquiry in 2009, and the company had to restate its financial results for several years.
The investigations have led to criminal charges against former President Joseph Pacifico and former Vice President of Sales Joseph Elles.
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