Tags: Crime, Government & News & Crime
December 18, 2012ATLANTA – Eric M. Martin, 42, of Roswell, former head of investor relations for Carter's, the major children's clothing company, pleaded guilty Dec. 18 to conspiracy to commit securities fraud and wire fraud in connection with a multi-year, multi-state insider trading conspiracy primarily involving Carter's stock.
Martin was convicted of tipping a former Wall Street analyst about Carter's quarterly and annual financial results and other material, non-public information in advance of the public announcement of the information during Martin's employment with Carter's between 2005 and 2009.
"Relying on insider tips to make profits in the nation's stock markets is not a sound investment strategy, but a federal Crime," said U.S. Attorney Sally Quillian Yates in a statement. "Tipping others for trading purposes - including friends and relatives - is a federal crime."
Martin was employed as the head of investor relations for Atlanta-based Carter's from early 2005 until his termination in March 2009.
Carter's is a publicly-traded company registered with the U.S. Securities and Exchange Commission (SEC), and its stock is listed on the New York Stock Exchange under the ticker symbol, "CRI."
Among other duties as Carter's head of investor relations, Martin participated in and helped the company's key executives prepare for Carter's public disclosure of its quarterly and annual financial results at the end of each quarter or fiscal year.
These disclosures took place in the form of "earnings releases," the issuance of a formal press release to the public and the SEC that contained the financial results, followed by a conference call in which the company's key executives presented the financial results to investors and Wall Street analysts.
These and other duties afforded Martin regular access to material, non-public information about Carter's upcoming earnings releases and other significant developments.
On a consistent basis between early 2005, and his termination in March 2009, Martin disclosed material, non-public information about Carter's upcoming earnings releases and other developments to a former Wall Street analyst identified in the indictment as "Cooperator Number 1" for the purpose of making illegal insider trades.
Cooperator Number 1 repeatedly bought and sold Carter's stock on the basis of this information, earning substantial illegal profits and illegally avoiding substantial losses.
As an example, Martin disclosed material, non-public information to Cooperator Number 1 in advance of Carter's May 2005 acquisition of competitor Oshkosh B'Gosh, which was at that time publicly traded on the NASDAQ Stock Market under the ticker symbol, "GOSHA."
The information related to the fact that Carter's would be surprising the market by acquiring Oshkosh for a price that was lower than the price at which Oshkosh stock was then trading.
As part of his plea agreement with the United States, Martin has agreed that he is responsible for illegal insider trading gains and losses avoided resulting from the conspiracy, his own trading, and relevant conduct between $2.5 million and $7 million.
A federal grand jury indicted Martin on Nov. 7 on one count of conspiracy, seven counts of securities fraud, and three counts of wire fraud.
Martin could receive a maximum sentence of 25 years in prison and a fine of up to $250,000.
A date for sentencing has not yet been set.