ATLANTA (AP) -- A former executive for Carter's Inc. has pleaded guilty to conspiracy to commit securities fraud, officials from the U.S. attorney's office in Atlanta said Wednesday.
Richard T. Posey is the second former executive of the Atlanta-based children's clothing company to plead guilty in what prosecutors have said was a multi-million dollar insider trading conspiracy. He entered a guilty plea Wednesday.
"Corporate insiders who disclose company secrets are the enablers who make illegal insider trading possible," United States Attorney Sally Quillian Yates said in a statement. "Insider trading undermines faith in the nation's stock markets. Public company executives and employees should be on notice that when it comes to material, non-public information, they are required to play by the same rules as everyone else."
Posey worked as vice president of operations for various Carter's brands and divisions for more than 10 years. He was fired in January.
Prosecutors say Posey, 52 of Duluth, disclosed inside information about the company's coming earnings releases and other developments to Eric M. Martin, the former head of investor relations, from April 2009 to July 2010. Martin was fired in 2009 and pleaded guilty in December.
Officials have said Martin, 42, traded stock between 2005 and 2009 based on nonpublic information about Carter's finances while he was employed by the company. Authorities said Martin also shared sensitive company information with a former Wall Street analyst before it was released publicly.
Officials said Posey warned Martin that an internal investigation was going to delay an earnings release for the third quarter of 2009 and Martin promptly sold more than 35,000 shares of the company's stock, which were valued at about $1 million.
As part of his plea agreement, Martin acknowledged that he was responsible for between $2.5 million and $7 million in the insider-trading scheme.
Prosecutors say Martin gave Posey stock tips about other companies in exchange for the Carter's information.
- Crime & Justice
- insider trading