The husband of former Playboy Enterprises Inc. Chief Executive Christie Hefner agreed to pay $168,352 to settle regulatory charges that he conducted insider trading in the publisher's shares based on information he learned from his wife.
William Marovitz, 66, was accused by the U.S. Securities and Exchange Commission of improperly trading Playboy shares in his brokerage accounts from 2004 to 2009 despite being warned by his wife, who he married in 1995, and Playboy's top lawyer not to do so.
"In 1998, Hefner made clear to Marovitz, both personally and through Playboy's general counsel, that she expected him to keep any information he learned from her confidential and not use the information to trade shares of Playboy," papers filed Wednesday with the U.S. District Court in Chicago show.
Despite the warnings, the SEC said Marovitz traded ahead of Playboy's announcements of a 2004 earnings shortfall and stock offering and a 2008 earnings shortfall, and while Playboy was in talks to be acquired by Iconix Brand Group Inc in late 2009.
Hefner, 58, had stepped down as chief executive and from Playboy's board earlier that year, but continued to discuss the acquisition with Iconix representatives, the SEC said.
Talks later broke down. Hugh Hefner, Playboy's founder and Christie Hefner's father, ultimately took the company private in March 2011 in a roughly $207 million transaction.
Marovitz, a lawyer, is president of Marovitz Group, a Chicago real estate development company.
His payment covers $100,952 of alleged improper trading gains, $34,236 of interest and a $33,164 civil fine. Marovitz did not admit wrongdoing in agreeing to the settlement with the SEC, which requires court approval.
"Mr. Marovitz has no comment on the settlement, but he wishes to note that he lost a substantial amount of money on his investments in Playboy stock over the years," his lawyer James Streicker said.
Playboy did not immediately return a request for comment.
Based in Chicago, Playboy is known for its namesake magazine, founded by Hugh Hefner in 1953 and featuring nude centerfolds, and its "Bunny Ears" logo.
The case is SEC v. Marovitz, U.S. District Court, Northern District of Chicago, No. 11-05259.
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