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 Eric Martin, a former vice president of investor relations at
Carter's, was sentenced to two years in prison by a federal judge in
Atlanta after pleading guilty in 2012 to conspiracy to commit
securities fraud and wire fraud.
Richard Posey, a former vice president of operations at Carter's who
prosecutors said provided illegal tips to Martin after Martin left
the company, was sentenced by U.S. District Judge Richard Story to
one year and three months in prison in light of his June 2013 guilty
plea.
Mark Megalli, a former fund manager at Level Global Investors who
prosecutors said was one of a number of investors at hedge funds who
received tips from Martin, was sentenced to one year and one day in
prison after pleading guilty in November.
The judge also ordered restitution be paid in the amounts of
$950,000 by Martin, $750,000 by Posey, and $50,000 by Megalli.
The sentencings were the latest development in a broad investigation
into what prosecutors called the first major criminal insider
trading case to be brought in Atlanta.
"Illegal insider trading undermines confidence in the nation's stock
markets," Atlanta U.S. Attorney Sally Quillian Yates said in a
statement. "Today's sentences are a step towards restoring that
confidence."
Paul Monnin, a lawyer for Megalli, said his client "is fully
satisfied with and accepting of the outcome." A lawyer for Martin
declined comment, while an attorney for Posey did not respond to a
request for comment.
Prosecutors said from 2005 to 2009, Martin, 44, disclosed details
about Carter's forthcoming earnings and other developments to an
unnamed former Wall Street analyst who cooperated in the probe.
They said after Martin left Carter's in 2009, he continued to
receive inside information about its earnings from his friend Posey,
53, through July 2010.
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Martin traded on the information and continued giving tips to the
ex-analyst, and in September 2009 began providing inside information
to investment firms that would hire him as a consultant, including
Level Global, according to prosecutors.
Megalli, a Level Global portfolio manager, in turn traded on that
information, enabling Level Global to earn $3 million, prosecutors
said.
Following the three men's pleas, prosecutors in May brought charges
against a fourth man, Steven Slawson, co-founder of New Jersey-based
Titan Capital Management, who they said also engaged in insider
trading in Carter's. He has pleaded not guilty. [ID:nL1N0OG01S]
The SEC has separately brought civil charges against several people.
Carter's has cooperated with the investigation.
The cases in U.S. District Court, Northern District of Georgia are
U.S. v. Martin, No. 12-cr-364; U.S. v. Posey, No. 13-cr-239; and
U.S. v. Megalli, No. 13-cr-442.
(Reporting by Nate Raymond in New York; Editing by Mohammad Zargham
and Lisa Shumaker)
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