{"id":42957,"date":"2014-07-09T08:36:22","date_gmt":"2014-07-09T12:36:22","guid":{"rendered":"http:\/\/www.hedgeco.net\/news\/?p=42957"},"modified":"2014-07-09T09:09:46","modified_gmt":"2014-07-09T13:09:46","slug":"2-executives-and-a-hedge-fund-manager-sentenced-to-federal-prison","status":"publish","type":"post","link":"https:\/\/hedgeco.net\/news\/07\/2014\/2-executives-and-a-hedge-fund-manager-sentenced-to-federal-prison.html","title":{"rendered":"Two Executives and A Hedge Fund Portfolio Manager Sentenced To Federal Prison"},"content":{"rendered":"

\"\"<\/a>New York (HedgeCo.Net) – Eric M. Martin, Mark Megalli, and Richard T. Posey have been sentenced to federal prison for their roles in a multi-million-dollar insider trading conspiracy involving childrens clothing company Carter\u2019s, Inc. stock.<\/p>\n

Mark Megalli worked at New York hedge fund Level Global Investors was the contact point for some of the insider trading, the FBI says. Megalli in turn caused Level Global to execute multimillion dollar trades in Carter\u2019s stocks based on the inside information received from Martin from September 2009 through July 2010. The former-Carter’s executives also tipped off others including NJ hedge fund Titan Capital Management LLC.<\/p>\n

Eric Martin was Carter\u2019s Director and later Vice President of Investor Relations, his actions, the FBI said, including illegal trading and tipping of others between 2005 and 2010 resulted in over $7 million in insider trading gains and losses avoided for Martin and his downstream tippees. Posey\u2019s illegal trading and tipping of Martin between 2009 and 2010 resulted in over $5 million in insider trading gains and losses avoided. Megalli\u2019s illegal trading between 2009 and 2010 resulted in over $3 million in insider trading gains and losses avoided for Level Global.<\/p>\n

The FBI said: “On a consistent basis between early 2005 and his separation from Carter\u2019s in March 2009, Martin disclosed material, non-public information about Carter\u2019s upcoming earnings releases and other developments to a former Wall Street analyst identified by the government as \u201cCooperator Number 1,\u201d for the purpose of making illegal insider trades. Cooperator Number 1 repeatedly bought and sold Carter\u2019s stock on the basis of this information, earning substantial illegal profits and illegally avoiding substantial losses. Cooperator Number 1 also tipped others, including Titan Capital Management LLC, a New Jersey hedge fund that had retained him as an outside consultant. Martin disclosed this and other material, non-public information in exchange for friendship, reciprocal stock tips about other public companies to which Cooperator Number 1 had access, and future business and networking opportunities.”<\/p>\n

After Martin separated from Carter\u2019s in March 2009, Martin continued to obtain inside information in advance of Carter\u2019s earnings releases and other events from Posey, who was his friend and former Carter\u2019s co-worker. Posey was employed as a Vice President of Operations for various Carter\u2019s brands and divisions and later as Vice President of Operations for the company\u2019s wholesale sales business from in or about July 2002 until his termination in January 2013. Posey disclosed the information to Martin from early 2009 through July 2010 in exchange for friendship, reciprocal stock tips, and future business and networking opportunities.<\/p>\n