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Ex-Restoration exec to settle insider trading case

October 08, 2008|From Bloomberg News

A former Restoration Hardware Inc. vice president agreed to settle U.S. regulatory allegations that he leaked inside information on a takeover bid to two friends while urging them to limit trades to avoid detection.

Ciriaco "Eric" Rivor's tips were passed to one friend's father, who ignored the advice and amassed 248,600 shares in the home-furnishing chain before the deal was unveiled in November, the Securities and Exchange Commission said in a lawsuit filed in federal court in San Francisco. The father's bets produced almost $900,000 in profit, the suit said.

"Attempts to 'stay under the radar' by trading in small quantities by no means ensures that traders will avoid detection," said Marc Fagel, head of the SEC's San Francisco office. Investigators "see people who are small traders but they're also part of a larger web."

Rivor, 49, and his two friends agreed to pay $167,150 to settle the case without admitting or denying wrongdoing, the SEC said. Rivor made no trades, and his friends each bought less than 10,000 shares, the agency said. The lawsuit is still pending against the father, Francis Axiaq.

Axiaq contests the allegations, said his lawyer, William Ziering in San Francisco. Rivor's lawyer, William Kimball, didn't return a phone call seeking comment.

Catterton Partners, a Greenwich, Conn.-based buyout firm, initially offered to acquire Restoration Hardware for $269 million, pushing shares up 140% on the day of the announcement. Catterton completed the takeover in June after the Corte Madera, Calif.-based retailer rejected a competing bid from Sears Holdings Corp.

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