Mark Megalli Charged
The Securities and Exchange Commission today announced insider trading charges against a New York-based investment professional who used nonpublic information about youth clothing company Carter’s Inc. to give the hedge fund where he worked a $3.2 million trading edge.
The SEC alleges that Mark Megalli obtained the inside information through a consulting agreement he had with the former vice president of investor relations at Carter’s, Eric Martin, who the SEC has previously charged among several others in its investigation into insider trading of Carter’s stock. Martin, who had left Carter’s and started his own consulting firm, maintained contact with at least one company insider and obtained confidential information in advance of market-moving events that he supplied to Megalli so he could trade on it. Megalli enabled hedge fund Level Global Investors L.P. to avoid approximately $2.4 million in losses and make $853,655 in illicit profits by trading shares ahead of positive or negative news.
“The information was hot enough that Megalli sometimes conducted the trades while he was still on the phone with his source,” said William Hicks, associate regional director of the SEC’s Atlanta Regional Office. “After one profitable trade, Megalli bragged to his colleagues about being ‘max short’ in advance of negative news without mentioning his inside source.”
As always, I’m surprised at how little coverage these kinds of crime get. Often, I will find no stories at all on SEC charges. In this case, four news outlets covered the story, Reuters, hedgco.net, FINalternatives and OPALesque. I will be watching to see if there is coverage by more of the media but I do not have high expectations.
From around the web.
From the web site, Relative Money.
Insider trading is the trading of a public company‘s stock or other securities (such as bonds or stock options) by individuals with access to non-public information about the company. In various countries insider trading based on inside information is illegal. This is because it is seen as being unfair to other investors who do not have access to the information.
I think that the scope of insider trading will be extended to other activities like HFT, Politiciens, Lobbyist, Dark Pools operators and owners and also the TBTF banskters institutions which have been, are… able to socialize losses versus reaping fat profits and bonuses.