Jonathan Daniel/Getty ImagesChristie Hefner and her husband, William Marovitz.
7:38 p.m. | Updated
The Securities and Exchange Commission has accused a member of the Playboy family of breaking the law.
William A. Marovitz, the son-in-law of Hugh Hefner, the founder of Playboy Enterprises, settled an S.E.C. lawsuit filed Wednesday that accused him of trading in shares of the publisher with insider information. The S.E.C. said that Mr. Marovitz, a lawyer and a former Illinois state senator, gained about $100,000 by trading on confidential corporate developments gleaned from his wife, Christie A. Hefner, the former chief executive of Playboy.
“Despite instructions from his wife that he should not trade in shares of Playboy and a warning from the general counsel of Playboy about his buying or selling Playboy stock, Marovitz bought and sold shares of Playboy in his own brokerage accounts from 2004 to 2009 ahead of public news announcements,” said the lawsuit, which was filed in Federal District Court in Chicago.
Mr. Marovitz, 66, agreed to pay about $168,000 in penalties, disgorged profits and interest to resolve the case. The settlement is subject to approval by a federal judge.
“My client has no comment on the S.E.C.’s complaint or settlement but wishes to note that he has lost a substantial amount of money on his investments in Playboy stock,” said James R. Streicker, a lawyer for Mr. Marovitz.
The case against Mr. Marovitz continues the federal government’s far-reaching crackdown into insider trading on Wall Street and beyond. Authorities have pursued a battery of cases against defendants who include corporate lawyers, doctors and railroad workers. Dozens of hedge fund traders have found themselves in the government’s cross hairs. The United States attorney’s office in Manhattan alone has in the last two years charged about 50 defendants with insider-trading crimes.
Mr. Marovitz’s prosecution is the latest of several so-called pillow-talk cases — insider-trading violations involving husbands and wives. Earlier this year, a San Francisco woman pleaded guilty to passing merger tips to her relatives that she had learned from her husband, a partner at a major accounting firm. In 2008, federal prosecutors brought criminal charges against a Lehman Brothers broker who had obtained confidential information about pending deals from his wife, a public relations executive who advised companies on mergers and acquisitions.
Married since 1995, the 58-year-old Ms. Hefner and Mr. Marovitz are a Chicago power couple. Ms. Hefner ran the Chicago-based Playboy from 1988 to 2009 and has been one of the city’s highest-profile business executives. Mr. Marovitz has been a fixture in Illinois politics and Chicago real estate for years. He is president of the Marovitz Group, a local real estate developer. They have no children.
The S.E.C. accused Mr. Marovitz of improper trading in Playboy stock on a number of occasions despite clear warnings from his wife and the company’s general counsel that he should not buy or sell Playboy shares while in possession of confidential information.
Howard Shapiro, the company’s top lawyer, specifically requested that Mr. Marovitz consult with him before trading Playboy stock. Mr. Marovitz never contacted him to discuss any of his transactions, the S.E.C. said.
A number of Mr. Marovitz’s trades surrounded Playboy’s 2009 merger talks with the Iconix Brand Group. During the time Ms. Hefner was negotiating the sale of the company to Iconix, Mr. Marovitz bought Playboy shares while knowing secret information about the deal that he had obtained from his wife, the complaint said. When Playboy announced the potential merger, Playboy’s stock rose 42 percent.
Iconix eventually dropped its acquisition plans. Before the news became public, causing a 10 percent drop in Playboy’s stock, Mr. Marovitz dumped his shares, avoiding thousands of dollars in losses, the S.E.C. said.
In another instance, in August 2004, Mr. Marovitz sold all his Playboy stock the day before the company reported a large quarterly loss that resulted in an 18 percent decline in its share price. The trade allowed Mr. Marovitz to avoid a $65,000 loss, the S.E.C. said.
The case against Mr. Marovitz originated during a routine S.E.C. examination of Mesirow Financial, the Chicago brokerage firm where Mr. Marovitz executed his trades.
Earlier this year, Mr. Hefner, the company’s dominant shareholder, took Playboy private in a deal valuing the company at about $207 million. The company had been publicly traded since 1971.
Article source: http://feeds.nytimes.com/click.phdo?i=7d36c25e613fb7c073155254d7dc7d9d
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