Sunglass firm founder to plead guilty to insider trading scheme
(Reuters) — The founder of a designer eyewear company whose family has held investments and leadership roles in many major retailers including DSW Inc. has agreed to plead guilty to engaging in insider trading with two Florida men using information he learned from a cousin.
Federal prosecutors in Boston disclosed in court papers Thursday that David Schottenstein had agreed to plead guilty to conspiring to commit securities fraud and cooperate in the prosecution of a venture capital firm founder and an entrepreneur.
Mr. Schottenstein, who founded designer sunglasses company Privè Revaux, in a statement provided by defense lawyer Eric Rosen said he took “full and sole responsibility for my conduct and deeply regret my actions.”
Prosecutors said Mr. Schottenstein traded on information he learned from a cousin who sat on the boards of directors of shoe retailer DSW and cannabis products company Green Growth Brands.
Mr. Schottenstein traded ahead of a 2017 DSW earnings announcement; the 2018 news that Albertsons Cos. and Rite Aid Corp. had agreed to merge; and a 2018 tender offer by GGB for Aphria Inc., which failed, prosecutors said.
The cousin's family business belonged to an investment consortium involved in the Rite Aid deal, which later failed.
Mr. Schottenstein made more than $600,000, the U.S. Securities and Exchange Commission said in a related lawsuit.
Prosecutors said Mr. Schottenstein also tipped two friends — Kris Bortnovsky, t co-founder of Sakal Capital Management, and Ryan Shapiro, who founded inmate money transfer service provider JPay — to the expected news. They were initially charged last month and formally indicted Thursday.
DSW is now called Designer Brands Inc. Its executive chairman is Mr. Schottenstein's first cousin once removed, Jay Schottenstein, who is also CEO of American Eagle Outfitters Inc.
Neither company responded to requests for comment.
