Economy

Ex-Disney Worker, Boyfriend, Charged In Insider Trading Scheme

A former Disney employee and her boyfriend were charged with scheming to sell inside information about the entertainment and media giant's financial performance to investors prior to that information being made public.

According to a Securities and Exchange Complaint, Bonnie Jean Hoxie, 33, a former administrative assistant to Disney's executive vice president of communications, was arrested Wednesday along with her boyfriend, Yonni Sebbag, 29.

The SEC, which described the alleged behavior as a "brazen scheme" accused the two of sending anonymous e-mails to hedge funds in the U.S. and abroad in which they offered information about Disney's second-quarter earnings before its public release for a payment to be negotiated.

The complaint says those e-mails resulted in the FBI arranging a sting operation with agents who posed as investors meeting Sebagg and paying him $15,000.

The document says Hoxie, who worked for Zenia Mucha, the executive vice president, provided the insider information to Sebagg who then relayed it to the agents.

The complaint makes for entertaining reading, which is apt considering we're talking about Disney here.

It goes without saying that Hoxie and Sebagg are presumed innocent until proven guilty. But if the information in it is accurate, it would seem to be the very definition of amateur hour.

Here's an excerpt from the complaint where federal prosecutors relate their e-mail and phone exchanges with Sebagg. One of my favorite parts is where he allegedly tells the FBI agents posing as investors "First of all, i am not a fed..." :

14. Sebbag stated that he was looking to build a business relationship with the Putative Traders and was able and willing to provide them non-public information on a regular basis in the future. In these communications, Sebbag made clear that he understood that the information he was providing was non-public and that he expected the purchaser to trade on the information. Sebbag also made clear that he wanted to be compensated for the information, including sharing in any trading profits, that he understood his conduct carried "risks," and that he wanted to avoid getting caught.

15. Specifically, in emails and telephone calls with various Putative Traders, Sebbag made the following statements (spelling and punctuation in the original), among others:

* "First of all, i am not a fed, I have no way to prove it at this point but i am not asking you to disclose your identity not i will disclose mine. It is up to you to determine if this is worth the risk as i did. I work for Disney, that is all i can tell you."

* "I can deliver 3 to 4 days before release. 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. I am asking you to make me an offer based on the capital gains from the trade and the risk i am taking delivering this information to you? Also, i am looking to build a strong business relationship with you for future quarters and information."

* "I dont think we will get caught if we stay discret and careful. You can count on my discretion as i am counting on yours.... In regards to the earning reports, i will email it to you as soon as i have it and we'll make arrangements for the payment via wire transfer once you have it. Can you please make me an offer based on the money you think you will be making from the trade and the risk i am taking giving away this information to you? Also, i am looking forward to building a strong business relationship with you for future quarters and information."

And then there was this e-mail exchange between Sebagg and Hoxie:

21. On May 9, Sebbag informed the Putative Traders that he would gain access to the actual earnings report 2-3 hours before the close of the market on May 11, and would email the report to the Putative Traders before it was due to be released to the public after the market closed that same day.

22. However, Sebbag failed to deliver the earnings report to the Putative Traders as scheduled because his source and Disney insider, Hoxie, experienced a delay in obtaining the report. Emails between Hoxie and Sebbag reveal mounting frustration at the delay. For example on May 11, Hoxie e-mailed Sebbag: "I told you that you were going to be waiting . . . ." Sebbag responded "Just hurry up," to which Hoxie replied "I have no control over this. Patience is a virtue." Still waiting for the information later that day, Sebbag urged Hoxie to "Get things moving with all the powers you have." Hoxie replied "3 hours have come and gone what is another hour at this point. Chill."

23. In a further effort to calm Sebbag, Hoxie asked in another email sent on May 11: "What would you suggest I do. If I could wave my magic wand and give you what you want — I would. However, since that is not going to happen I suggest you call on you inner Buddhist — and CHILL the f' out."

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