Former Securities and Exchange Commission Chairman Richard Breeden and his hedge-fund company paid $118.4 million for its 5.94 million-share investment in Zale, the firm said Wednesday in an SEC filing. Breeden Capital previously owned a 7.7 percent stake and has held talks with unidentified managers.

The hedge-fund firm becomes the second-largest Zale shareholder, after Atlanta-based Shapiro Capital Management Co.

Zale named Neal Goldberg as CEO last month to replace Mary Elizabeth Burton after the retailer posted losses in four of the past six quarters. Its mall-based namesake stores --totaling about 2,200 locations -- have lost market share to Kay Jewelers.

Irving, Texas-based Zale agreed in September to sell its luxury brand Bailey Banks & Biddle to Finlay Enterprises Inc. for $200 million to aid profitability.

Shares of Zale fell 79 cents, or 4.9 percent, to close at $15.27 on the New York Stock Exchange. The shares fell 43 percent last year.

Richard Breeden became chairman of H&R Block Inc. in November after boosting his firm's stake in the tax preparation company and becoming an activist shareholder.