Shares in The Children's Place Retail Stores Inc shot up 9% yesterday (26 September) following the news it has sacked its chief executive Ezra Dabah after an investigation found he had violated the company's code of conduct on securities trades.

Dabah will leave his post immediately, the company said, but will remain a member of the board of directors.

Chuck Crovitz, a current board member, has been named interim chief executive officer and a search is about to begin to find a permanent successor to Mr Dabah.

The children's wear retailer, which operates 889 The Children's Place stores and 328 Disney Stores, said an internal probe found Dabah did not properly report an increase in his wife's ownership of company shares, and that on two occasions he pledged shares of the company during a 'black-out period' without prior approval.

The investigation also uncovered irregularities in expense reimbursement practices by the company's chief creative officer, who it did not name.

Both executives have been ordered to reimburse the company for its out-of-pocket costs related to the investigation.

While none of the violations will have a material affect on operating results, the company said, it has asked for extra time to complete its overdue annual report for the year to 3 February.

The report should have been filed on 31 August, but has delayed by ongoing discussions over the remodelling and refreshing of numerous Disney Stores as well as the securities investigation.

The Children's Place Retail Stores' second quarter losses nearly doubled to $27.1m, while sales rose 7% to $424.3m.