Financial supervisory authorities charged a 56-year-old New Yorker with insider trading on Tuesday, claiming that the manager knew in advance that Foot Locker’s disappointing Income would trigger a stock sale. According to authorities, the manager earned a total of about $113,000 – and now, according to a pending settlement, he has to pay back twice that amount.
According to the Securities and Exchange Commission, Barry Siegel short-circuited the sneaker and apparel brand’s stock twice, once when he was still working as senior director of order planning and management and a second time after Foot Locker fired him as part of a wave of layoffs. Siegel had worked for the company for a total of two decades at the time, and authorities said he knew negative sales and inventory numbers would be mentioned in earnings calls with investors.
According to the SEC’s complaint, Siegel sold 8,000 shares of Foot Locker short in May 2023, just two days before the company announced its first-quarter earnings. 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 will crash, and buys back the same number of shares at the lower price and for a profit. In Siegel’s case, the sneaker and sporting goods retailer’s share price fell 27% after it announced its earnings before the market opened on May 19. At 9:31 a.m. that same day, Siegel allegedly made about $83,000 after buying shares to cover his short position.
His second transaction occurred in August 2023, about a week after Foot Locker fired him, authorities said. Siegel sold 3,000 shares short before second-quarter results were announced and Foot Locker’s stock price fell 28%. At the time, Siegel earned $30,132, the SEC said.
Foot Locker was founded in 1974 and is known for managing major brands such as Nike, Adidas, pumaand limited edition shoes, has struggled in recent years due to a decline in mall traffic; the company announced plans to close 400 shops by 2026. The plan is part of a vision to focus more on sneaker hype and experimental concept stores and move away from shopping malls.
Siegel has neither admitted nor denied the allegations and has agreed to repay the $113,000 he earned from shorting the stock, plus interest and a $113,000 fine. He is also barred from serving as an officer or director of any publicly traded company.
A spokesman for the SEC declined to comment beyond the details provided in the press release. Siegel did not immediately respond to a request for comment.