Disney worker arrested in insider trading scheme

By Ben Rooney, staff reporter

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, according to the charges. 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 the arrests "suggest that the integrity of the securities exchanges can be compromised not only by top executives, but also by anyone entrusted with material, non-public information."

Law-enforcement officials, he added, 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, according to the charges.

Then, hours before the results were released on May 11, the pair allegedly sent another e-mail indicating that Disney would report earnings per share of 48 cents, which was better than what stock analysts had expected.

Three days later, Sebbag met with undercover agents and accepted payment of $15,000 in exchange for the information, according to the complaints.

In addition to information about Disney's earnings, the complaint said Sebbag attempted to lure investors with information regarding a proposed sale of the ABC network. But Disney said the reference to conversations about selling ABC "were and are false."

Sebbag, who used the alias Jonathan Cyrus, said the couple wanted to "build a strong business relationship" that would involve sharing inside information concerning future quarters, 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.  To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 17,417.65 226.28 1.32%
Nasdaq 4,684.28 46.29 1.00%
S&P 500 2,022.95 20.79 1.04%
Treasuries 1.75 0.03 1.57%
Data as of 3:44pm ET
Company Price Change % Change
Apple Inc 118.97 3.66 3.17%
Yahoo! Inc 43.67 -2.79 -6.01%
Bank of America Corp... 15.44 0.25 1.61%
Facebook Inc 77.20 0.96 1.26%
Microsoft Corp 42.08 0.90 2.17%
Data as of 3:32pm ET


The online retail giant reported earnings Thursday that beat Wall Street's expectations, sending shares higher after the closing bell. More

The Wednesday announcement that Don Thompson will retire as CEO of McDonald's leaves just two black CEOs in the elite Dow 30. More

Google reported a quarterly profit on Thursday that rose from a year ago, but the company fell short of Wall Street's expectations. More

On demand delivery startup WunWun is expecting its order volume to double by the time they close up shop on Monday. All thanks to a blizzard. More

The IRS said it has carried out thousands of audits of offshore schemes and pursued criminal charges that have resulted in "billions of dollars in criminal fines and restitutions." And it won't stop there. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2015 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2015. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2015 and/or its affiliates.