Bloomberg's Greg Farrell has a long feature out about what happens to a couple when one spouse trades on inside information they got form the other.
The stand-out in all of the vignettes is the case of Christie Hefner, the daughter of media legend Playboy founder Hugh Hefner and the former CEO of Playboy Enterprises.
In 2010, Hefner's husband of 15 years, a former Illinois state senator named William Marovitz, confessed that he was being investigated for insider trading. According to federal investigators, Marovitz had illegally bought Playboy stock.
Like a lot of couples, Hefner and Marovitz talked about business when they were dating. Playboy even paid Marovitz for helping to broker a casino deal in 1993.
When it came to buying Playboy shares, though, Hefner was always very clear to her partner that it was a definite 'no'. She even had a lawyer draft a brief for her husband about the consequences of buying Playboy stock in 1998. Howard Shapiro, the attorney, told Marovitz to call him with any questions. According to the SEC, Marovitz never did.
Through their entire marriage, the couple kept separate brokerage accounts. That how, in April of 2004, it's quite possible that Hefner had no idea that her husband reportedly bought 5,000 shares of Playboy stock ahead of the announcement that the company would issue new stock to help pay down debt. The share price jumped 8% after the announcement and Marovitz made over $2,000.
After that, Marovitz kept going. His trades helped him gain or avoid losses of $100,952, according to the SEC.
Six years later, though, he and his wife were testifying before SEC investigators.
On Nov. 8, 2010, Marovitz and Streicker appeared at the SEC’s Chicago office to provide investigative testimony. Over the course of 90 minutes, Marovitz declined to answer any questions about his trading activity, invoking his Fifth Amendment right 179 times, even to basic questions about whether he knew anyone associated with Playboy Enterprises.
Regarding his conversations with his wife, Marovitz invoked a “marital communication privilege,” which can bar testimony by one spouse against another.
Three weeks later, Hefner and her attorney visited the SEC office for her testimony. In contrast to her husband’s appearance, Hefner spent the better part of four hours describing her actions around the five dates on which the SEC suspected her husband had been trading on insider information. She said she would generally abide by the same marital communication privilege that Marovitz had invoked.
Hefner told investigators that she had every reason to trust her husband, which one can only imagine leads to intense feelings of betrayal. Marovitz never admitted any wrongdoing, but he did pay a $168,352 fine.
According to Bloomberg Hefner and Marovitz have separated.
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