Financial watchdogs charged a 56-year-old New Yorker with insider trading on Tuesday, alleging the executive knew in advance that Foot Locker’s disappointing earnings would trigger a stock selloff. In total, authorities said the exec made about $113,000—and now he has to pay it back double, according to a pending settlement deal.
Per the Securities and Exchange Commission, Barry Siegel shorted the sneaker and apparel brand’s stock twice, once while he still worked as a senior director of order planning and management, and a second time after Foot Locker terminated him in a round of corporate layoffs. Siegel had worked at the company a total of two decades at that point, and authorities said he knew there would be negative sales and inventory data in earnings calls with investors.
According to the SEC’s complaint, Siegel short-sold 8,000 shares of Foot Locker’s stock in May 2023, just two days before the company’s first-quarter earnings announcement. Typically, a short sale is a bet that a stock price will fall. An investor borrows shares at the current market price, hopes the stock nosedives, and buys back the same number of shares at the lower price and profits. In Siegel’s case, the sneaker and athletic retailer’s stock price fell 27% after it announced earnings before the market opened on May 19. At 9:31 a.m. that same day, Siegel allegedly made about $83,000 after he bought stock to cover his short position.