Fired Foot Locker employee made $100,000 after shorting stock, SEC says

According to the Securities and Exchange Commission, Barry Siegel shorted the athletic shoe and apparel brand’s stock twice, once while he was still working as senior director of planning and order management and the second time after Foot Locker fired him in a round of corporate layoffs. Siegel had worked at the company for a total of two decades at the time, and authorities said he knew there would be negative sales and inventory data in earnings calls with investors.

According to the SEC complaint, Siegel short sold 8,000 shares of Foot Locker stock in May 2023, just two days before the company’s first-quarter earnings announcement. Typically, a short sale is a bet that the price of a stock will fall. An investor borrows shares at the current market price, hopes the shares sink, and buys back the same number of shares at the lower price and profits. In Siegel’s case, the sneaker and sports retailer’s stock price fell 27% after it reported earnings before the market opened on May 19. At 9:31 a.m. that same day, Siegel reportedly made about $83,000 after buying shares to cover his short position.

The second transaction occurred in August 2023, about a week after Foot Locker fired him, authorities said. Siegel short sold 3,000 shares before the company’s second-quarter earnings came out and Foot Locker’s stock price fell 28%. On that date, Siegel earned $30,132, the SEC said.

Foot Locker, founded in 1974 and known for stocking major brands like Nike, Adidas, Puma and limited-edition kicks, has struggled in recent years amid slowing mall traffic; 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 malls.

Siegel neither admitted nor denied the allegations and agreed to repay the $113,000 he made by shorting the stock, plus interest, in addition to a $113,000 fine. He is also prohibited from serving as an officer or director of a public company.

An SEC spokesman declined to comment beyond the details of the press release. Siegel did not immediately respond to a request for comment.