A Mickey Mouse Fraud Attempt

The Securities and Exchange Commission charged a Walt Disney Co. employee and her boyfriend with insider trading for plotting to sell confidential information about the company’s quarterly earnings to hedge funds.

The SEC alleged in a complaint filed Wednesday that Bonnie Jean Hoxie, an administrative assistant to a “high-level” Disney executive, and her boyfriend, Yonni Sebbag, sent anonymous letters in March to more than 20 hedge funds in the U.S. and Europe, offering to provide results of Disney’s second quarter earnings in exchange for a fee.

Some hedge funds alerted the SEC, which immediately worked with the U.S. Attorney’s Office for the Southern District of New York and the Federal Bureau of Investigation to investigate.

The FBI set up an undercover operation and made several contacts with Sebbag who offered to sell the information, in one instance for $15,000 and in another for half the expected trading profits.

Earlier this month, Hoxie obtained confidential information concerning Disney’s earnings and provided it to Sebbag, who sold it to an FBI agent posing as an investment manager.

“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. “Fortunately, multiple hedge funds reported the illicit scheme, and the SEC and criminal law enforcement authorities acted quickly to stop this brazen attempt to establish an ongoing insider trading business.”

According to the SEC’s complaint, Hoxie had access to Disney’s confidential information about its financial performance and operating plans. The complaint alleged that Hoxie and Sebbag orchestrated a scheme to sell information to hedge funds to be used for purposes of insider trading. 

The SEC alleged Sebbag told undercover FBI agents he wanted to establish a business relationship to share confidential information on a regular basis.

According to the SEC, two days before Disney’s earnings were released, Sebbag e-mailed undercover agents a 107-page confidential document that contained a series of talking points for Disney executives for their earnings conference call. It contained information about the company’s performance and future prospects for various business segments.

The SEC further alleged that Hoxie learned Disney’s earnings per share for the quarter and provided that information to Sebbag, who provided it to an undercover agent approximately two hours before its public release.

At a May 14 meeting in New York, the SEC said Sebbag told agents he wanted “to make a lot of money” through the arrangement and asked for their advice on how to open up an offshore account to deposit proceeds from the scheme. Sebbag left the meeting with an envelope containing $15,000 in cash, and he made arrangements to meet with them again in California to continue building the relationship.

The FBI arrested Sebbag and Hoxie on Wednesday.

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