The U.S. Securities and Exchange Commission has sued another key figure to seize ill-gotten gains in an ongoing multimillion-dollar insider trading investigation involving Atlanta-based Carter’s Inc., the children’s clothing company.
Richard T. Posey, former vice president of operations for wholesale sales, has already pleaded guilty to using his wife’s brokerage account to trade the company’s stock just before unfavorable quarterly financial results were reported. The SEC said Posey illegally placed trades based on company information that was privy only to executives.
Such alleged insider trading is a violation of federal law.
Efforts to reach Posey were unsuccessful Friday. Efforts were also being made to reach Carter’s for comment.
Posey is one of several former executives or investors targeted by the SEC, which regulates Wall Street. Joseph Pacifico, former president of Carter’s, and Joseph Elles, the company’s executive vice president of sales also face insider trading charges.
Last June, Posey pleaded guilty in federal court in Atlanta to insider trading. The purpose of this week's suit is to recover the former executive's gains.
The SEC said that from January 2006 through at least October 2009, Posey repeatedly traded Carter’s stock just before quarterly earnings announcements, making profits and avoiding losses totaling about $50,000.
From April 2009 to at least October 2010, the former executive repeatedly tipped off the company’s former head of investor relations, Eric Martin, with insider information on pending earnings reports. Martin then tipped off others who profited from trades based on the information. Martin pleaded guilty in December 2012.
Last October, Dennis Rosenberg, a retired New York hedge fund investment consultant and market analyst who reported on Carter's stock, agreed to forfeit more than $600,000 in proceeds and interest after being accused of trading on information originally provided by Posey.
Posey was accused of violating Carter’s own rules against executives’ trading in its stock just before earnings reports are released. The rules state directors, officers and other employees and their families are prohibited from trading in the stock 28 days before the close of the fiscal quarter or fiscal year and ending after the second business day after an earnings report has been made public.
Carter’s has more than 700 company-operated stores in the U.S., Canada and Japan, specializing in clothing for infants and young children.
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