The husband of former Playboy Enterprises Inc Chief Executive Christie Hefner agreed to pay $168,352 to settle regulatory charges that he engaged in insider trading of 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 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 U.S. district court in Chicago show.
Marovitz married Hefner in 1995, making him the son-in-law of Playboy founder Hugh Hefner. Christie Hefner, 58, was Playboy's chief executive from 1988 to 2009.
Despite the warnings, the SEC said, Marovitz traded ahead of Playboy's announcements of 2004 and 2008 quarterly earnings shortfalls and a 2004 stock offering.
It said he also traded when Playboy was in talks to be acquired by Iconix Brand Group Inc in late 2009.
Christie Hefner had stepped down as chief executive and from Playboy's board earlier that year but continued to negotiate a possible sale, the SEC said.
Talks later broke down, and Hugh Hefner ultimately took Playboy private in March 2011 in a roughly $207 million transaction.
Marovitz, a lawyer and former Illinois state senator, 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.
The defendant did not admit wrongdoing, and his settlement 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 spokeswoman Cathy Walker and Martha Lindeman, a spokeswoman for Christie Hefner, declined to 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.