SENTENCED: Two former Carter’s Inc. executives, Eric M. Martin and Richard T. Posey, were sentenced to federal prison for their roles in an insider trading scandal involving company stock.
Martin was the former vice president of investor relations. He was sentenced to two years in prison and ordered to pay $950,000 in restitution. Posey was the former vice president of operations. He was sentenced to one year imprisonment and ordered to pay $750,000 in restitution.
This story first appeared in the July 10, 2014 issue of WWD. Subscribe Today.
According to information from the Federal Bureau of Investigation in Atlanta Tuesday, “Martin’s 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’s illegal actions between 2009 and 2010, which included providing information in advance of earnings releases to Martin after he ceased employment with the company, resulted in over $5 million in insider trading gains and losses avoided, the FBI said.
In a separate matter also involving a former Carter’s executive for securities fraud involving accounting irregularities, Joseph Pacifico is still awaiting trial, according to the U.S. Attorney’s Office in Atlanta. Pacifico is the former president of the children’s giant.
A federal grand jury indicted Pacifico in March 2012. According to the indictment, Pacifico allegedly was aware that certain executives at the company had been “deliberately causing Carter’s to falsely record in its accounting books millions of dollars in rebates,” otherwise known as margin support, paid to Kohl’s and other retailers.
The charges against Pacifico are only allegations and still need to be proven by the federal government.