US: Third ex-Carter's exec charged with insider trading
The former head of investor relations for children's wear company Carter's Inc has been charged with insider trading - making him the company's third former executive to be charged as part of an ongoing investigation.
A federal grand jury yesterday (7 November) charged Eric Martin with conspiracy, securities fraud, and wire fraud in connection with multi-year, multi-state insider trading schemes primarily involving Carter's stock.
The indictment alleges that between 2005 and 2009, he traded in Carter's stock based on material, non-public information about the company's quarterly and annual financial results - and tipped off a former Wall Street analyst ahead of Carter's announcement of the information.
The FBI said the Wall Street analyst then bought and sold Carter's stock on the basis of this information, earning substantial illegal profits and illegally avoiding substantial losses.
It also alleges that Martin traded in Carter's stock for his own benefit on the basis of material, non-public information about Carter's earnings releases and other events during his employment with the company.
He is also accused of buying thousands of shares of Carter's stock during company-wide trading blackout periods that preceded the company's quarterly and annual earnings releases, even though company insiders were prohibited from trading in Carter's stock at those times. He allegedly made these trades without gaining approval from the company's CFO, which company policies required him to do so.
"This indictment charges that for years, Carter's trusted Martin with the company's most intimate secrets, including information about its not-yet-disclosed financial results," said US attorney Sally Quillian Yates.
"Instead of safeguarding this inside information, he was using it to make illegal profits in the stock market and tipping others so that they could do the same."
The indictment charges Martin with one count of conspiracy and with multiple counts of securities fraud and wire fraud. The conspiracy and securities fraud charges against Martin each carry a maximum sentence of 25 years in prison and a fine of up to $250,000. The wire fraud charges each carry a maximum sentence of 20 years in prison and a fine of up to $250,000.
This is not the first allegation of financial wrongdoing at the company. Former president Joseph Pacifico was charged in March with a multi-million dollar securities fraud cover-up between 2004 and December 2009.
And last year, former executive vice president Joseph Elles pleaded not guilty to allegations of financial fraud and insider trading.
The charges against these two executives were focused on Elles granting excessive discounts or rebates to Kohl's in order to induce the department store retailer to buy greater quality of Carter's products. The discounts were intended to help Kohl's defray costs related to inventory clearance and sales promotions, and to allow Kohl's achieve a desired profit margin on its sales of goods purchased from Carter's.
Elles then persuaded Kohl's to postpone deducting these discounts from invoice payments until later quarters, which meant the discounts were not reflected in Carter's quarterly financial reports, leading the company to overstate its quarterly profit.
Pacifico was charged for securities fraud, causing the filing of false financial statements, and falsifying the books and records of a public company, due to his knowledge of Elles alleged actions.
Atlanta-based Carter's makes apparel exclusively for babies and young children under its own Carter's and Osh Kosh brands, as well as private label apparel. It has cooperated fully with the investigation.
Consensus among industry executives seems clear that China's many advantages mean it will continue to be key to apparel sourcing strategies - despite its rising prices, labour issues, and government p...
As retailers struggle to differentiate themselves from their peers, and have little room to manoeuvre when it comes to mark-ups and markdowns, there's a growing awareness that the supply chain can con...
US department store operator JC Penney has been forced to abandon a central part of its turnaround plans after the strategy failed to gain traction with consumers. ...
Delia's, which sells clothing for teenage girls and young women, has appointed former Gap executive Tracy Gardner to the newly-created role of chief creative officer....
Children's wear manufacturer Carter's has today (25 April) seen its first-quarter net profit surge 28.3% on the back of higher retail and online sales....
US children's wear maker Carter's has recalled 218,000 pieces of infant clothing because the zipper pull can detach, posing a choking risk to young children....
Teen apparel retailer Delia's Inc has seen its fourth-quarter losses widen after it was hit by slower demand. ...
Catherine Malandrino is set to be the third designer to team up with US department store retailer Kohl's Corporation on its DesigNation limited-edition collection. ...
- Will Amazon take over the US apparel market?
- US groups seek workable apparel provisions in TPP
- Pakistan textile mills fear rash of closures
- VF Corp confirms interest in Africa sourcing
- Factory funding gap has mixed impact in Myanmar
- VF Corp ups guidance on "strong" Q2
- Under Armour secures Germany and Austria deals
- Bangladesh workers rally for unpaid wages
- Intertek takes garment inspections to Myanmar
- Under Armour lifts outlook after Q2 revenue hike
- Global Database of the Top 1000 Apparel Producers - Company Names, Financial Performance, and Contact Details
- Ethiopia – the emerging textile and clothing industry
- Management briefing: Factory safety and auditing: The key challenges
- Global market review of workwear - forecasts to 2019
- Global market review of lingerie - forecasts to 2020