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05-26-2010, 03:04 PM
Disney worker arrested in insider trading scheme
By Ben Rooney, staff reporter
May 26, 2010: 3:00 PM ET
NEW YORK (CNNMoney.com) -- The FBI arrested a Disney employee and her boyfriend Wednesday on charges that the couple tried to sell inside information about the company to hedge funds, federal regulators said.
The Securities and Exchange Commission has charged Bonnie Jean Hoxie and her boyfriend, Yonni Sebbag, for offering a total of 20 hedge funds early access to Disney's second-quarter financial results in a "brazen scheme" to profit from inside information.
In addition to the SEC's civil complaint, the U.S. Attorney's Office, working with the FBI, filed criminal charges against Hoxie and Sebbag in New York.
Hoxie, who was an administrative assistant to Disney's head of corporate communications until Tuesday, obtained confidential information concerning the company's quarterly earnings and provided it to Sebbag in early May, regulators said.
Sebbag subsequently sold the information to an FBI agent posing as an investment manager. In one case, he was promised half the expected trading profits, and in another he was paid $15,000 in cash.
"Hoxie and Sebbag stole Disney's confidential pre-release earnings information and put it up for sale," said Robert Khuzami, director of the SEC's Division of Enforcement, adding that many of the hedge funds the pair contacted had come forward to expose the scheme.
Hoxie, 33, and Sebbag, 29, were arrested in Los Angeles Wednesday and are expected to appear in a federal court there later this afternoon.
They each face a maximum sentence of 20 years in prison on counts of wire fraud and conspiracy to commit securities fraud. In addition, the couple could face a fine of $250,000, or twice the gross gain or loss from the offense, whichever is larger.
"This investigation should serve as a warning," said George Venizelos, assistant director of the FBI office in New York. "If you're contemplating acquiring and profiteering from insider information, sometimes the person you're trying to sell it to is really an undercover FBI agent."
U.S. Attorney Preet Bharara added that regulators are committed to identifying and prosecuting all individuals "whose greed motivates them to betray their employer's trust and corrupt the market."
Disney has been fully cooperating with the investigation, the company said in a statement.
In its complaint, the SEC released excerpts from e-mail messages Sebbag sent to FBI agents posing as hedge fund managers, which indicated that he wanted to establish a long-term relationship, and that he wanted to be compensated for sharing confidential information.
"I can deliver 3 to 4 days before release," Sebbag said, according to one e-mail. "I will email you the report as soon as i have it and you will wire transfer the money to my account after you get ahold of it."
On May 8, three days before Disney reported its second-quarter financial results, the couple sent undercover agents a list of corporate talking points that executives would use to discuss the company's earnings.
Then, hours before the results were released on May 11, the pair sent another e-mail indicating that Disney would report earnings per share of 48 cents, which were better than what stock analysts had expected.
Sebbag wanted to "build a strong business relationship" that would involve sharing inside information concerning future quarter, according to the e-mails in the SEC's complaint. He also requested help setting up an off-shore account to help launder the ill-gotten gains.
"I dont think we will get caught if we stay discrete and careful. You can count on my discretion as i am counting on yours," he said.
Very interesting...to me at least
By Ben Rooney, staff reporter
May 26, 2010: 3:00 PM ET
NEW YORK (CNNMoney.com) -- The FBI arrested a Disney employee and her boyfriend Wednesday on charges that the couple tried to sell inside information about the company to hedge funds, federal regulators said.
The Securities and Exchange Commission has charged Bonnie Jean Hoxie and her boyfriend, Yonni Sebbag, for offering a total of 20 hedge funds early access to Disney's second-quarter financial results in a "brazen scheme" to profit from inside information.
In addition to the SEC's civil complaint, the U.S. Attorney's Office, working with the FBI, filed criminal charges against Hoxie and Sebbag in New York.
Hoxie, who was an administrative assistant to Disney's head of corporate communications until Tuesday, obtained confidential information concerning the company's quarterly earnings and provided it to Sebbag in early May, regulators said.
Sebbag subsequently sold the information to an FBI agent posing as an investment manager. In one case, he was promised half the expected trading profits, and in another he was paid $15,000 in cash.
"Hoxie and Sebbag stole Disney's confidential pre-release earnings information and put it up for sale," said Robert Khuzami, director of the SEC's Division of Enforcement, adding that many of the hedge funds the pair contacted had come forward to expose the scheme.
Hoxie, 33, and Sebbag, 29, were arrested in Los Angeles Wednesday and are expected to appear in a federal court there later this afternoon.
They each face a maximum sentence of 20 years in prison on counts of wire fraud and conspiracy to commit securities fraud. In addition, the couple could face a fine of $250,000, or twice the gross gain or loss from the offense, whichever is larger.
"This investigation should serve as a warning," said George Venizelos, assistant director of the FBI office in New York. "If you're contemplating acquiring and profiteering from insider information, sometimes the person you're trying to sell it to is really an undercover FBI agent."
U.S. Attorney Preet Bharara added that regulators are committed to identifying and prosecuting all individuals "whose greed motivates them to betray their employer's trust and corrupt the market."
Disney has been fully cooperating with the investigation, the company said in a statement.
In its complaint, the SEC released excerpts from e-mail messages Sebbag sent to FBI agents posing as hedge fund managers, which indicated that he wanted to establish a long-term relationship, and that he wanted to be compensated for sharing confidential information.
"I can deliver 3 to 4 days before release," Sebbag said, according to one e-mail. "I will email you the report as soon as i have it and you will wire transfer the money to my account after you get ahold of it."
On May 8, three days before Disney reported its second-quarter financial results, the couple sent undercover agents a list of corporate talking points that executives would use to discuss the company's earnings.
Then, hours before the results were released on May 11, the pair sent another e-mail indicating that Disney would report earnings per share of 48 cents, which were better than what stock analysts had expected.
Sebbag wanted to "build a strong business relationship" that would involve sharing inside information concerning future quarter, according to the e-mails in the SEC's complaint. He also requested help setting up an off-shore account to help launder the ill-gotten gains.
"I dont think we will get caught if we stay discrete and careful. You can count on my discretion as i am counting on yours," he said.
Very interesting...to me at least