Wednesday, 1 July 2015
Last updated 4 hours ago
Nov 15 2013 | 12:45pm ET
A former Level Global Investors portfolio manager has admitted to insider-trading of Carter's Inc. shares.
Mark Megalli, who formerly led the defunct hedge fund's consumer group, pleaded guilty to conspiracy to commit securities fraud in Atlanta federal court yesterday. His case is not related to the insider-trading case that brought Level Global down and sent its co-founder to prison, but is linked to a growing scandal at the children's clothing company that has seen two former vice presidents plead guilty to criminal charges. In addition, a retired consultant last month settled Securities and Exchange Commission allegations that he passed tips about the company to two hedge fund managers.
In Megalli's case, prosecutors say he traded on tips from a former Carter's investor-relations executive in 2009 and 2010. Those trades earned Level Global between $2.5 million and $7 million, the government said. In some cases, "the information was hot enough that Megalli sometimes conducted the trades while he was still on the phone with his source," the SEC's William Hicks said. Megalli faces an SEC lawsuit, as well.
Level Global closed in 2011, following a Federal Bureau of Investigation raid that would eventually lead to co-founder Anthony Chiasson's conviction on insider-trading charges. Chiasson was sentenced to six-and-a-half years in prison in May.
May 27 2015 | 2:15pm ET
Support Hedge Funds Care, also known as Help For Children (HFC), by participating in this year's raffle. All proceeds go to support HFC's mission of preventing and treating child abuse. Read more…