SEC Charges Former J. Crew Director Frank LoBue With Insider Trading

SEC v. Frank LoBue, Case No. 12 CIV 7944 (S.D.N.Y).  On October 25, 2012, the SEC announced insider trading charges against Frank LoBue, a former Director of Store Operations at J Crew.  LoBue regularly received confidential information about J. Crew’s “Stores” component, which accounted for about 70% of the company’s sales.  LoBue received information about the company’s sales and expenses that reflected that financial results were strong.  He purchased J. Crew stock based on the confidential information before the company issued a public earning’s release.  After releasing the results, J. Crew’s stock closed up more than 26%.  LoBue traded a second time on inside information in advance of another public earnings release.  His profits from both trades exceeded $60,000.  LoBue settled the SEC’s charges without admitting or denying the allegations.  He consented to the entry of a proposed final judgment permanently enjoining him from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; ordering him to pay disgorgement of $60,735.60, plus prejudgment interest of $6,749.33; and imposing a civil penalty in the amount of $60,735.60.

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