Two former Carter’s Inc. executives and a New Jersey hedge fund manager were sentenced to federal prison and ordered to return more than $1.7 million after being convicted of insider trading of the Atlanta children’s clothing firm’s shares.
Investigators with the FBI’s Atlanta office said the case, which involved additional alleged conspirators, stretched over several years and allowed the conspirators and several Wall Street players to reap at least $15 million in illegal trading profits.
“These sentences send a strong message to company insiders and investment industry professionals in this district and elsewhere that they are required to follow the same rules that govern regular investors, and that the consequences for failing to do so can be severe,” said United States Attorney Sally Quillian Yates.
Eric M. Martin, 44, of Roswell, was sentenced to two years in prison and ordered to pay $950,000 of restitution. Investigators said the former vice president of investor relations, who pleaded guilty to conspiracy in 2012, had started providing inside information to an unnamed Wall Street analyst starting in 2005. He continued providing illegal tip to other firms as a consultant after he left Carters in 2009.
After Martin left Carters, investigators said, the company’s former vice president of operations, Richard T. Posey, continued to feed inside information to Martin and others. Both executives also traded in the illegally, investigators said.
Posey, 53, of Duluth, was sentenced to a year in prison and ordered to pay $750,000 in restitution.
Mark Megalli, 42, of New York, was sentenced to a year in prison and to pay $50,000 restitution. Investigators said the former portfolio manager at hedge fund Level Global used information from Martin to profit from multimillion-dollar trades of Carters stock in 2009 and 2010 before the company reported its quarterly financial results to investors.
In May, a federal grand jury indicted another New Jersey hedge fund manager, Steven E. Slawson, co-founder of Titan Capital Management, for alleged insider trading involving Carter’s stock. His case is still awaiting trial.
