Last week, the SEC filed an insider trading case against William Marovitz, the husband of former Playboy CEO Christie Hefner. After a review of past husband-wife betrayal cases, I am placing the case in the Elevated (”Clothes Thrown Out Window”) category on Enforcement Action'sFamilial Betrayal Advisory System.

The SEC alleges that on five occasions between 2004 and 2009, Marovitz engaged in insider trading in Playboy stock based on information that he misappropriated from Hefner, who was for most of the relevant period the CEO of Playboy. Marovitz allegedly did so despite the fact that Hefner made it clear to him that any information he learned from her was confidential and "despite instructions from his wife that he should not trade in shares of Playboy and a warning from the general counsel of Playboy about his buying or selling Playboy stock."

Based on our quickly-growing number of Familial Betrayal Advisory System precedents, this case belongs in the Elevated (”Clothes Thrown Out Window”) category. Unlike the Guarded ("Counseling Required") case of SEC v. Macdonald, in which the husband simply traded trading behind the wife's back with no further cautions or promises involved, in Marovitz we have allegedly specific instructions from his wife and Playboy's GC that Marovitz not trade on confidential information.  I find, therefore, that Marovitz's alleged disregard of these instructions pushes this case to the level of familial outrage required for the category of Elevated (”Clothes Thrown Out Window”). See SEC v. Edelman ("Elevated" case involving express caution from girlfriend not to trade, a supposed agreement not to do so, and a post-betrayal break-up).

To recap, the full list now looks like this:

Severe ("Hell Hath No Fury"): SEC v. DevlinHigh ("Restraining Order"): SEC v. StummerElevated ("Clothes Thrown Out the Window"): SEC v. Edelman; SEC v. MarovitzGuarded ("Counseling Required"): SEC v. Goodman; SEC v. Rocklage, SEC v. MacdonaldLow ("Someday We'll Laugh About It"): SEC v. Melton, SEC v. Gangavarapu; SEC v. Ni; SEC v. Goetz

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