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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 22970 / April 10, 2014

Securities and Exchange Commission v. Richard T. Posey, Civil Action No. 1:14-CV-664 (N.D. Ga.)

SEC Charges Carter's, Inc.'s Former Vice-President of Operations with Insider Trading and Tipping

On March 6, the Securities and Exchange Commission filed a civil injunctive action in federal court in the Northern District of Georgia against Richard T. Posey ("Posey"), the former Vice-President of Carter's, Inc. ("Carter's" or "the company"), an Atlanta based public issuer and clothing marketer. The Commission alleges that Posey repeatedly traded in the securities of Carter's based on inside information that he possessed as a result of his position at Carter's, and that he tipped material nonpublic information to the company's former Vice-President and Director of Investor Relations, Eric M. Martin ("Martin").

The Commission's complaint alleges that from at least January 2006 through at least October 2009, while in possession of material inside information, Posey traded Carter's stock without preclearance during blackout periods in advance of quarterly earnings releases and announcements. Posey's trades produced gains and avoided losses totaling $49,778. The complaint also alleges that between April 2009 and at least October 2010, Posey repeatedly tipped Carter's inside information to Martin, who in turn tipped others. In October 2009, two of Martin's tippees avoided losses of more than $3 million based on one of Posey's tips.

The Commission's complaint alleges that Posey 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, an officer and director bar, disgorgement with prejudgment interest, and civil monetary penalties pursuant to Section 21A of the Exchange Act.

Posey consented to the entry of an order enjoining him from future violations of the antifraud provisions, ordering him to pay disgorgement and prejudgment interest totaling $60,265, and permanently barring him from serving as an officer and director of a public company. The amount of a civil penalty is to be determined at a future date by the Court upon motion of the Commission.

On June 19, 2013, in response to a criminal information filed by the U.S. Attorney's Office for the Northern District of Georgia, Posey pled guilty to one count of conspiracy to commit securities fraud in connection with the illicit conduct described in the Commission's complaint.

This is the fourth case that the Commission has brought alleging insider trading in connection with its ongoing investigation of trading in the securities of Carter's and the Commission's seventh overall case as part of its broader investigation of financial fraud.

SEC Litigation Releases Related to Insider Trading Cases:

  • SEC v. Eric Martin, et al., Lit. Rel. No. 22458 (August 24, 2012)
  • SEC v. Dennis Rosenberg, Lit. Rel. No. 22858 (October 29, 2013)
  • SEC v. Mark Megalli, Lit. Rel. No. 22870 (November 14, 2013)

SEC Litigation Releases Related to Financial Fraud Cases:

  • SEC v. Joseph Elles, Lit. Rel. No. 21784 (December 20, 2010)
  • SEC v. Joseph Pacifico, Lit. Rel. No. 22517 (October 19, 2012)
  • SEC v. Michael Johnson, Lit. Rel. No. 22520 ( October 26, 2012)

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.

 

http://www.sec.gov/litigation/litreleases/2014/lr22970.htm


Modified: 04/11/2014