The U.S. Securities and Exchange Commission on Tuesday charged a former Foot Locker executive of insider trading ahead of two company earnings announcements.
Barry Siegel, 56, who worked as senior director of order planning and management, netted about $113,000 by shorting Foot Locker stock. He agreed to pay $226,000 to settle the charges.
According to the SEC, Siegel shorted Foot Locker stock once while he was still at the footwear retailer, and a second time after the company let him go as part of corporate layoffs. Siegel had worked for the company for two decades. The SEC alleges he had access to material nonpublic sales and inventory data in his role, and he essentially used that information to bet the stock would fall after the earnings report came out.
In May 2023, Siegel shorted 8,000 shares of Foot Locker, two days before the company’s first-quarter earnings. (Shorting a stock involves an investor borrowing shares at a stock’s current price, and if it falls, the investor profits by buying back the shares at the lower price.) On May 19, 2023, Foot Locker’s first-quarter earnings prompted shares to fall 27%, netting Siegel about $83,000.
A few months later in August, Siegel bet Foot Locker’s stock would drop again. This short came a week after getting laid off by the company, according to the SEC release. Siegel shorted 3,000 shares before the company’s second-quarter earnings call, the SEC says. The stock sank 28%, netting him more than $30,000.
Siegel didn’t deny or admit to the allegations. His payment of $226,000 is double what he made from his trades, and includes interest and a fine. He is banned from serving as a public officer of a company.
Foot Locker decided to relocate its headquarters from New York to Florida in a cost-cutting move a year after it announced it was closing 400 stores nationwide. Earlier this year the company announced a plan to revamp many of its stores in an effort to reverse a sales slump. Foot Locker did not immediately respond to a request for comment.
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