Financial watchdogs on Tuesday charged a 56-year-old New Yorker with insider trading, alleging the executive knew in advance that Foot Locker’s disappointing earnings would lead to a stock sell-off. In total, authorities said the director made about $113,000 — and now he must pay back double that, according to a pending settlement.
According to the Securities and Exchange Commission, Barry Siegel twice shorted the sneaker and apparel brand’s stock, once while working as a senior director of order planning and management, and a second time after Foot Locker fired him following a series of layoffs at companies. Siegel had worked at the company for a total of 20 years at the time, and authorities said he knew there would be negative sales and inventory data on earnings calls with investors.
According to the SEC complaint, Siegel short-sold 8,000 shares of Foot Locker in May 2023, just two days before the company’s first-quarter earnings release. Normally, a short sale is a bet that a stock price will fall. An investor borrows shares at the current market price, hopes the shares take a nosedive, and buys back the same number of shares at the lower price and profit. In Siegel’s case, the sneaker and athletic retailer’s stock price fell 27% after he announced profits before the market opened on May 19. At 9:31 a.m. that same day, Siegel would have 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 the company’s second-quarter earnings came out and Foot Locker’s stock price fell 28%. That time, Siegel earned $30,132, the SEC said.
Foot Locker, founded in 1974 and known for selling big brands like Nike, Adidas, Puma and limited-edition kicks, has struggled in recent years with a slowdown in store traffic; it announced plans to close 400 stores by 2026. The plan is part of a vision to focus more on sneaker hype and experimental concept stores and move away from shopping centers.
Siegel has neither admitted nor denied the charges and agreed to pay back the $113,000 he made by shorting the stock, plus interest, in addition to a $113,000 fine. He may also not serve as an officer or director of a public company.
An SEC spokesperson declined to comment beyond the details in the press release. Siegel did not immediately respond to a request for comment.
This story originally appeared on Fortune.com