Securities Law Blog

The Securities and Exchange Commission (SEC) worked closely with the U.S. Attorney’s Office for the Southern District of New York and the Federal Bureau of Investigation (FBI) to stop a Walt Disney Company employee and her boyfriend from an attempt to establish an ongoing insider trading business.

On May 26, 2010 Bonnie Jean Hoxie, an administrative assistant to a high-level Disney executive, and her boyfriend Yonni Sebbag, were charged with violating the anti-fraud provisions of the federal securities laws. Hoxie and Sebbag allegedly offered to sell and sold material non-public information to be used for the purpose of insider trading.

Hoxie allegedly had regular access to confidential information concerning Disney’s financial performance and operating plans. The Disney employee then allegedly provided the information to her boyfriend.

According to the SEC complaint, in March 2010 the couple sent anonymous letters to more than 20 hedge funds in the United States and Europe, offering to “provide pre-release results of Disney’s second quarter 2010 earnings in exchange for a fee.”

The SEC was alerted by several hedge funds of the suspicious letters they had received, which led to an undercover operation by the FBI.

According to e-mails to FBI agents posing as investment managers, Sebbag allegedly said that he wanted to form a “strong business relationship…for future quarters and information,” and discussed payment for providing the information. Then two days before Disney publicly announced its earnings, Sebbag allegedly e-mailed the undercover agents a 107-page confidential document containing very detailed information about the quarterly performance and future prospects of Disney’s various businesses.

The SEC also alleges that “Hoxie learned that Disney’s Earnings Per Share (EPS) for the quarter and provided that information to Sebbag, who in turn provided it to an undercover agent approximately two hours before its public release.”

Sebbag allegedly met with the undercover agent on May 14, 2010 to receive payment for the inside information in the amount of $15,000 in cash. Sebbag and Hoxie were arrested by the FBI on May 26, 2010.

Over a year ago Attorney Javier Cremades helped organize 60 law firms from 25 countries outside of the United States, to represent investors from Europe, Latin America and Israel defrauded by the Bernard Madoff Ponzi scheme. On May 25, 2010, the founder of the Madrid law firm Cremades & Calvo-Sotelo announced to the press that over the past year, 720,000 of the investors represented by the firms have settled with their banks.

The $15.5 billion in settlements has helped repay 100 percent of the amount the clients had invested but typically did not include the phony paper gains that were listed on investor statements. Many of the settlements also included provisions that require clients to keep their money at the bank for several years. The estimated 20 banks are reportedly located in France, Spain, Portugal and Germany.

The majority of settlements came from commercial European banks and other global institutions through which investor funds were channeled into the multi-billion dollar Madoff Ponzi scheme. Unlike the majority of United States victims, who invested through money managers, midsize accounting firms and independent investment advisors, whose pockets don’t run as deep.