Children's Place Retail Stores Wednesday fired Chief Executive Ezra Dabah and named board member Chuck Crovitz as interim CEO, sending its shares up as much as 9 percent.
The children's clothing retailer said an investigation found Dabah did not comply with its securities-trading policies. The internal probe also found irregularities in expense reimbursement practices from its chief creative officer.
Dabah did not properly report an immaterial increase in his wife's ownership of company shares from a trust distribution, and on two occasions, he pledged shares during a "black-out period" without required prior approval, the company said.
Children's Place said Dabah would remain a member of its board, which requested his resignation, effective immediately.
Because of its change in leadership, Children's Place said it needed additional time to file delinquent financial statements with the U.S. Securities and Exchange Commission, including its annual report for the year ended in February.
The company said it did not fire its chief creative officer, whom it did not name, but "imposed significant sanctions," including the refund of amounts erroneously charged.
None of the violations have a material effect on its results, the company said.
Children's Place shares shot up 9 percent to $26.16 following the news, but slid back to $25.65, up 6.9 percent, on the New York Stock Exchange.