Christie Hefner and husband Bill Marovitz in 2003. (Zbigniew Bzdak/Chicago Tribune)
William Marovitz, a former state Senator who is married to Christie Hefner, has agreed to settle civil charges of insider trading in the stock of Playboy Enterprises Inc., the iconic company his wife once led.
The Securities and Exchange Commission said Wednesday that Marovitz will pay $168,352 to settle the complaint without admitting nor denying the allegations. The payment includes giving up $100,952 in stock profits and avoided losses, interest and a civil penalty of $33,163.
The Securities and Exchange Commission said Wednesday that Marovitz will pay $168,352 to settle the complaint without admitting nor denying the allegations. The payment includes giving up $100,952 in stock profits and avoided losses, interest and a civil penalty of $33,163.
The SEC alleged in a suit filed Wednesday in federal court in Chicago that Marovitz bought and sold shares in Playboy over several years based on confidential information he learned from Hefner, who was the company's chief executive for two decades before resigning in 2009. The SEC said his total gains from the trades was about $100,000, includes losses he avoided by trading ahead of public information.
Marovitz, 66, and Hefner, 58, have been married since 1995. Marovitz served in the state Senate from 1980 to 1993 and before that he was in House of Representatives for six years. Since leaving public office, he has worked as a real estate developer. He is the nephew of late federal judge Abraham Lincoln Marovitz.
The SEC alleges that Hefner instructed her husband that he should not trade in Playboy shares. She even asked the company's top lawyer to talk to Marovitz about the implications of him trading in Playboy stock, the suit said. The SEC said that the company's lawyer, Howard Shapiro, faxed Marovitz a memo in 1998, warning him about the rules governing insider trading and requesting that Marovitz consult with him before executing any trades.
Despite the warnings, Marovitz allegedly bought and sold Playboy shares at least five times between 2004 and 2009 ahead of public news announcements, the SEC said.
The first time was on April 15, 2004, when he bought 5,000 shares for $13.19 each. The trade occurred six days before the company announced an offering of stock. After the announcement, its stock rose 8 percent.
That Aug. 5, Marovitz sold all 25,000 shares he owned for $11.60 each. The next day, Playboy reported a second-quarter loss that sent its stock tumbling 18 percent, to $9.
On May 5, 2008, Marovitz sold 14,700 shares at $8.27 each. The following day, Playboy announced a first-quarter loss that sent its stock down 9 percent.
His other two alleged insider trades occurred in 2009 when Playboy was in talks to sell itself to Iconix Brand group, the SEC said. Hefner resigned from Playboy on Jan. 31, 2009, but remained involved in the merger discussions, according to the SEC.
On Nov. 10, Marovitz bought 9,000 shares at $2.77 each. Three days later news reports surfaced that Iconix was looking to acquire Playboy for more than $300 million. Playboy's stock jumped 42 percent on Nov. 12.
The merger talks ended on Dec. 15. At 11:05 a.m., Hefner received an email informing her that Iconix was no longer interested in acquiring Playboy, the suit said.
At 2:40 p.m., Marovitz called his broker at Mesirow Financial and instructed him to sell his 35,200 shares. The broker was able to sell only 23,752 share at $3.88 each before the market closed on Dec. 15.
When media outlets reported the breakdown of merger talks on Dec. 16, Playboy's stock fell 10 percent, to $3.46.
Earlier this year, Hugh Hefner, Christie's father and founder of Playboy magazine who has a controlling interest in the company, struck a deal to take the company private.
asachdev@tribune.com
asachdev@tribune.com
Copyright © 2011, Chicago Tribune
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