In its perpetual quest to investigate and prosecute illegal insider trading, the United States Securities and Exchange Commission (SEC) brought insider trading charges and obtained a final judgment against Barry Siegel, a former Foot Locker employee.
The SEC’s insider trading charges, per the SEC’s federal district court complaint, were predicated upon alleged violations of the anti-fraud provisions of the federal securities laws, specifically: Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Siegel, on a neither admit nor deny basis, consented to the entry of final judgment.
The facts underlying the alleged insider trading violations as claimed by the SEC’s civil enforcement complaint are as follows: Foot Locker employed Siegel from 1998 to 2006, and again from 2011 to 2023. His most recent title at Foot Locker was Senior Director of Order Planning Management, North America, and in that capacity his job duties included working with buyers and planners within the company to increase allocation of inventory to one of Foot Locker’s distribution centers with the goal of cutting the company’s logistical expenses. Notably, Siegel acknowledged having read and understood the company Code of Business Conduct, which prohibited insider trading.
In connection with Foot Locker’s announcement of its financial results for the first quarter of 2023, Siegel — in possession of the details of bearish financial results — sold short 8,000 shares of Foot Locker stock just two days prior to the public announcement betting, in essence, that the stock would fall once the financials became public. Following the release of the news, Foot Locker’s stock plummeted 27.24%. On the day of the announcement, but prior to the market opening, Siegel bought Foot Locker stock to cover his short position thus securing a $82,736.06 profit.
In August of 2023, about a week after Foot Locker laid Siegel off and prior to the company’s public announcement of its financial results for the second quarter of 2023, the SEC alleges Siegel once again engaged in illegal insider trading. He sold short 3,000 shares of Foot Locker stock and, when the stock price fell 28.28%, he covered his short position for a profit of $30,132.89.
The final judgment, which embodies the SEC’s remedies sought in its enforcement action, permanently enjoins Siegel from violations of the antifraud provisions of with which he was charged, orders him to pay disgorgement of $112,868.95 plus prejudgment interest of $9,975.97, as well as a civil monetary penalty of $112,868.95 (the same amount of disgorgement, which is the typical civil penalty for settled insider trading cases), and bars him from acting or serving as a public company officer or director.
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David Chase is a SEC investigation attorney and former SEC enforcement prosecutor who investigated securities frauds for the SEC’s Enforcement Division. Since leaving the SEC over twenty-five years ago, he has aggressively defended his clients in SEC investigations. Mr. Chase can represent you in a SEC investigation no matter where you live, be it Connecticut, New Jersey, New York, Illinois or California. Speak with David for a free consultation about your SEC investigation or an SEC Subpoena you may have just received at: 800-760-0912. You can also e-mail him at: david@davidchaselaw.com or visit the Firm’s website at: www.securitiesfrauddefense.net for information on the firm’s five-star reviews, as well as prior successful results for its clients in SEC cases.
