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U.S. Securities and Exchange Commission

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 22870 / November 14, 2013

Securities and Exchange Commission v. Mark Megalli, Civil Action No. 1:13-CV-03783-AT (N.D. Ga.)

SEC Charges Former Level Global Investment Banker with Insider Trading

On November 14, the Securities and Exchange Commission filed a civil injunctive action in federal court in the Northern District of Georgia against Mark Megalli (“Megalli”), a former investment banker at Level Global Investors, L.P. (“Level Global”), then a New York based hedge fund. The Commission alleges that Megalli caused Level Global to trade in the securities of Carter’s Inc., the Atlanta-based clothing marketer, on the basis of material non-public information provided by a former Carter’s executive.

The Commission’s complaint alleges that, on several occasions from September 2009 through July 2010, Megalli, who was then working at Level Global, caused Level Global to trade in advance of market-moving news concerning Carter’s after Megalli was tipped concerning the information by a former Carter’s executive, who in turn was receiving tips from a current Carter’s executive. A number of these trades occurred while Megalli was on the phone with his source. The total profits and losses avoided on the trades placed or directed by Megalli are in excess of $3 million dollars.

The Commission’s complaint alleges that Megalli violated the antifraud provisions of the federal securities laws, Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and seeks a permanent injunction, disgorgement with prejudgment interest and civil monetary penalties pursuant to Section 21A of the Exchange Act.

This is the third case that the Commission has brought alleging insider trading in connection with its ongoing investigation of trading in the securities of Carter’s (see SEC v. Eric Martin, et al, . http://www.sec.gov/litigation/litreleases/2012/lr22458.htm; SEC v. Dennis Rosenberg, http://www.sec.gov/litigation/litreleases/2013/lr22858.htm;) and the Commission’s sixth overall case as part of its broader Carter’s investigation (see SEC v. Joseph Elles, http://www.sec.gov/litigation/litreleases/2010/lr21784.htm; SEC v. Joseph Pacifico, http://www.sec.gov/litigation/litreleases/2012/lr22517.htm; SEC v. Michael Johnson, http://www.sec.gov/litigation/litreleases/2012/lr22520.htm).

The Commission appreciates the assistance of the U.S. Attorney’s Office for the Northern District of Georgia and the Financial Industry Regulatory Authority. The Commission’s investigation is continuing.

SEC Complaint

 

http://www.sec.gov/litigation/litreleases/2013/lr22870.htm


Modified: 11/15/2013