Lingerie Insider Trading, Consultant pays fine for insider trading regarding merger

New York, NY: (Sep-25-07) The US Securities and Exchange Commission (SEC) brought charges against Joseph Keeney, a former consultant to Frederick's of Hollywood Inc., alleging that he traded inside information about a merger of the lingerie maker with New York-based Movie Star Inc., another intimate apparel company. Movie Star disclosed in November 2006 that it was in discussions with a private apparel company about a possible merger, but didn't identify the company by name. When the merger agreement with Frederick's, a unit of FOH Holding Inc., was announced in mid-December, Movie Star's shares gained and closed at $1.46 a share, above the average cost of 97 cents per share that Keeney paid, according to the SEC. The SEC's civil lawsuit, filed in federal court in Washington, said Keeney resigned as Frederick's outside consultant in January 2007.

In a settlement reached, Joseph Keeney will return about $81,210 of allegedly illegal profits, plus interest, and pay a $77,540 fine. Keeney settled without admitting or denying the SEC's claims that he bought 157,000 shares of Movie Star, starting in mid-September 2006, after taking part in nonpublic merger negotiations with the firm. [WALL STRET JOURNAL: INSIDER TRADING]

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Published on Sep-27-07