Monday, September 25, 2023
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SEC Busts Alleged Inside Trader

ATLANTA (CN) - Atlanta investment adviser Mark Megalli profited and avoided losses of $3 million by trading on inside information, the SEC claims in court.

In a federal lawsuit Thursday, the SEC claims that Megalli "traded shares of Carter's, Inc. ... an Atlanta-based public issuer and clothing marketer, based on material non-public information. Megalli executed these trades on behalf of Level Global

Investors, L.P. ('Level Global'), a now-defunct investment adviser, generating profits and/or losses avoided of approximately $3 million."

Megalli is the only defendant in the SEC lawsuit.

It continues: "Megalli received the material non-public information from Eric Martin, a former Carter's employee. Martin received the information from Richard Posey, who was Carter's Vice President of Operations ('Posey' or 'Carter's VP').

"In every instance of trading tipping described below, Megalli knew or should have known that the material non-public information he received was communicated in breach of a duty of trust or confidence that a Carter's insider owed Carter's."

Carter's is the self-proclaimed "largest branded marketer in the U.S. of apparel exclusively for babies and young children," the SEC says in the lawsuit.

It sells clothing under the Carter's and Oshkosh brands.

Martin is awaiting sentencing after pleading guilty to one count of an 11-count indictment accusing him of tipping others to inside information.

Level Global was an unregistered investment adviser in Greenwich, Conn., that managed $4 billion in assets in 2010.

The SEC seeks disgorgement, penalties and an injunction.

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