Insiders

Founder of designer sunglasses company to plead guilty to insider trading

January 06, 2022 at 11:05 pm EST

BOSTON (Reuters) -The founder of a designer eyewear company whose family has held investments and leadership roles in retailers like DSW Inc has agreed to plead guilty to engaging in insider trading with two other men, court papers showed.

Federal prosecutors in Boston in court pa
pers on Thursday disclosed that David Schottenstein agreed to plead guilty https://tmsnrt.rs/3eYbhxW to conspiring to commit securities fraud and cooperate in the prosecution of a hedge-fund manager and an entrepreneur.

Schottenstein, who founded designer sunglasses company Prive Revaux, said in a statement provided by defense lawyer Eric Rosen that he took "full and sole responsibility for my conduct and deeply regret my actions."

Prosecutors and regulators said he made over $600,000 trading on information gleaned from a relative who sat on the boards of shoe retailer DSW, now called Designer Brands Inc, and cannabis products company Green Growth Brands.

Court papers did not name the relative but his description matched that of Joey Schottenstein, the defendant's second cousin whose father is Jay Schottenstein, Designer Brands' executive chairman and American Eagle Outfitters Inc's chief executive.

A spokesperson for Joey and Jay Schottenstein said they were "shocked and saddened" to learn of the illegal conduct and breach of their confidences.

David Schottenstein, 38, traded ahead of a 2017 DSW earnings announcement; a 2018 merger agreement between Albertsons and Rite Aid Corp; and a 2018 bid by GGB for Aphria Inc, which failed, prosecutors said.

A Schottenstein family business belonged to an investment consortium in the Rite Aid deal, which later failed.

Prosecutors said David Schottenstein also tipped two friends - Kris Bortnovsky, the co-founder of Sakal Capital Management, and Ryan Shapiro, who founded inmate money transfer service provider JPay - to the expected news.

Using those tips, the U.S. Securities and Exchange Commission in a related lawsuit said Bortnovsky and his fund made more than $4 million and Shapiro reaped $121,000.

They were initially charged last month and formally indicted Thursday.

James Froccaro, Bortnovsky's lawyer, said he is innocent. Martin Weinberg, Shapiro's attorney, said he "is factually and legally innocent."

(Reporting by Nate Raymond in Boston; Editing by Bill Berkrot, Cynthia Osterman and Edwina Gibbs)

By Nate Raymond

Stocks mentioned in the article

Add to a list Add to a list 0 selected To use this feature you must be a member Log in Sign up	Price	Change	5d. change	Capi.
AURORA CANNABIS INC.	9.56 CAD	-5.63%	+4.37%	402M
ORGANIGRAM HOLDINGS INC.	2.59 CAD	-1.89%	+1.17%	198M
HEXO CORP.	1.81 CAD	-16.59%	-39.87%	29.39M
AUXLY CANNABIS GROUP INC.	0.055 CAD	+10.00%	+10.00%	45.47M
RITE AID CORPORATION	0.13 USD	0.00%	+8.33%	7.15M
DESIGNER BRANDS INC.	9.41 USD	+2.39%	+0.86%	526M
AMERICAN EAGLE OUTFITTERS, INC.	24.47 USD	+3.25%	+6.67%	4.67B

Jay Schottenstein

Mr. Jay Schottenstein is an Executive Chairman at Designer Brands, Inc., an Executive Chairman & Chief Executive Officer at American Eagle Outfitters, Inc., a Chairman, President & Chief Executive Officer at Schottenstein Stores Corp., a Chairman at SB Capital Group LLC, a Chairman at Schottenstein Realty LLC, a Chairman at SEI, Inc., a Chairman & Chief Executive Officer at Schottenstein Realty Trust, Inc., a Chief Executive Officer at American Signature, Inc., a Chief Executive Officer at Value City Furniture, Inc. and a Manager at Schottenstein RVI LLC. He is on the Board of Directors at AB Acquisition LLC and Albertsons Cos., Inc. Mr. Schottenstein was previously employed as a Chairman by Retail Ventures, Inc. He received his graduate degree from Indiana University.

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Linked companies
AMERICAN EAGLE OUTFITTERS, INC.	Chief Executive Officer
Schottenstein Stores Corp. Schottenstein Stores Corp. Department StoresRetail Trade Schottenstein Stores Corp. operates departmental furniture store. The company was founded by Jerome Schottenstein in 1972 and is headquartered in Columbus, OH.	Chief Executive Officer