Ex-Carter's executives, NY fund manager get prison for insider trading

Tue Jul 8, 2014 8:18pm EDT
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By Nate Raymond

(Reuters) - Two former executives at Carter's Inc (CRI.N: Quote) and a New York hedge fund manager received prison sentences on Tuesday for engaging in an insider trading conspiracy involving the children's clothing company's stock.

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.   Continued...

Carter's clothes hang on a store rack in New York February 19, 2014.  REUTERS/Brendan McDermid