U.S. SEC sues investor over alleged Carter's insider-trading scheme

Reuters

By Jessica Dye

Oct 29 (Reuters) - The U.S. Securities Exchange Commissionfiled a civil complaint Tuesday against a retired hedge-fundinvestment consultant and market analyst who allegedlyparticipated in an insider trading scheme involvingAtlanta-based clothing marketer Carter's Inc.

Dennis Rosenberg, 70, was able to trade in advance ofmarketing-moving news from Carter's based on tips received froma former executive at the company between 2005 and 2010,according to the complaint in federal court in Georgia.

Rosenberg passed along tips to investment advisers at twohedge funds, who also traded on the information, the complaintsaid.

The tips netted Rosenberg approximately $500,000 inill-gotten gains, losses avoided and consulting fees based ontips to a hedge-fund client, the complaint said. The individualswho received the tips made about $2 million in combined lossesavoided and profits, according to the complaint.

Rosenberg, who has not admitted or denied the allegations,has agreed to hand over $500,000, plus $108,000 in interest, theSEC said. A decision on civil monetary penalties will be made ata later date, according to the SEC.

A lawyer for Rosenberg declined to comment on the case.

Rosenberg is the second insider-trading case by the SEC overthe alleged Carter's scheme. In August 2012, the SEC sued thecompany's former vice president of investor relations, EricMartin, who agreed to a consent order in September barring himfrom serving as an officer or director at a public company.

Martin also pleaded guilty in December to a criminal chargefor tipping others to non-public information while employed atCarter's, and is currently awaiting sentencing, according to theSEC.

Another former vice president at Carter's, Richard Posey,pleaded guilty in June to conspiracy to commit securities fraudin connection with alleged insider-trading, according to thecomplaint.

Carter's, a publicly listed company, markets apparel forbabies and young children. In 2005, it acquired OshKosh B'GoshInc, a well-known children's clothing brand. The case is Securities and Exchange Commission v. Rosenberg,U.S. District Court for the Northern District of Georgia, No.13-3559.

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