A retired Wall Street analyst has agreed to forfeit more than $600,000 in proceeds and interest after being accused of insider trading involving Atlanta-based Carter’s Inc., the children’s clothing company.
The case is the latest in a series of regulatory and legal actions involving Carter’s management and insiders accused of trading the company’s publicly traded stock based on information not readily available to other investors.
The SEC said Dennis Rosenberg, a retired New York hedge fund investment consultant and market analyst who reported on Carter’s stock between 2005 and 2010, neither admitted nor denied the allegations.
Efforts were being made Wednesday to reach Rosenberg and Carter’s for comment.
Rosenberg was ordered to relinquish about $500,000 in gains and $108,000 in interest. He also faces possible civil monetary penalties, the SEC said in announcing the settlement.
The regulatory agency accused Rosenberg of selling Carter’s stock after being tipped off by the company’s former head of investor relations, Eric M. Martin, about disappointing upcoming earnings. Rosenberg was also accused of disclosing the information to two investment advisers for two separate hedge funds, and they also allegedly traded Carter’s stock based on the inside information.
The SEC said Rosenberg was able to avoid about $500,000 in losses by trading on the information, and the advisers he shared the information with avoided about $2 million in losses.
The agency has brought five cases against executives and others connected to Carter’s in its ongoing insider trading investigation.
Martin was convicted in December 2012 of tipping a former Wall Street analyst then identified as only “Cooperator Number 1” in court documents. Prosecutors said Martin repeatedly bought and sold the company’s stock based on the inside information provided by Richard T. Posey, Carter’s former vice president of operations for wholesale sales, between 2009 and 2010.
This past June, Posey pleaded guilty in federal court in Atlanta to disclosing company information about upcoming earnings reports and other developments to Martin.
Carter’s reported last week that, excluding one-time expenses , the company’s adjusted net income in the third quarter rose nearly 7 percent to $65 million, or $1.12 per diluted share, compared with adjusted net income of $61 million, or $1.02 per diluted share, in the year-ago period. The most recent per-share results were 4 cents better than a concensus of Wall Street analysts had expected. Revenue of $760.2 million in the quarter also exceeded analysts’ expectations.
About the Author
