SEC ALLEGED SPOUSE OF FORMER PLAYBOY CEO WAS AN INSIDE TRADER IN PLAYBOY SECURITIES

The following is an excerpt from the SEC website: "August 3, 2011 The Securities and Exchange Commission today filed a civil injunctive action in the U.S. District Court for the Northern District of Illinois charging William A. Marovitz, the spouse of former Playboy CEO Christie Hefner, with illegal insider trading in Playboy stock in advance of public news announcements. The SEC alleges that on five occasions between 2004 and 2009, Marovitz traded based on confidential information that he misappropriated from Hefner, who was the CEO of Playboy during most of the trades at issue. Marovitz bought and sold Playboy stock in his own brokerage accounts ahead of public news announcements 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. In total, Marovitz gained profits and avoided losses of $100,952. According to the SEC’s complaint, between 2004 and 2009 Marovitz misappropriated confidential, non-public information about Playboy from Hefner. Hefner made clear to Marovitz in 1998, both personally and through Playboy’s general counsel, that she expected him to keep any information he learned from her about Playboy confidential and not to trade based on this information. In November 2009, Marovitz learned about Iconix’s potential acquisition of Playboy and used that confidential information to buy Playboy stock in advance of a public announcement of a potential merger, which caused a 42% increase in Playboy’s stock price. When Iconix ended its efforts to acquire Playboy in December 2009, Marovitz sold Playboy stock before the news became public, resulting in a 10% decrease in Playboy’s stock price. The SEC also alleges that Marovitz also misused confidential information he misappropriated from Hefner about Playboy’s earnings announcements and stock offering to trade in Playboy. In May 2008, Marovitz sold Playboy stock the day before Playboy’s first quarter 2008 negative earnings announcement caused its stock price to decline by 9%. Similarly, in August 2004, Marovitz sold all of his Playboy stock the day before Playboy reported a second quarter loss resulting in an 18% drop in its stock price. And, in April 2004, Marovitz purchased Playboy stock before Playboy announced an offering of its Class B stock, which caused its stock price to increase by 8%. Without admitting or denying the allegations in the complaint, except as to jurisdiction, Marovitz has consented to entry of a final judgment that permanently enjoins him from violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. Marovitz has also consented to pay $168,352 in disgorgement, prejudgment interest and civil penalties. The settlement is subject to approval by the court. This case originated during a SEC examination of a broker-dealer. The Commission acknowledges the assistance of the Internal Revenue Service in this matter.”