Disney Exec's Assistant Arrested for Insider Trading
An assistant to a top executive at Walt Disney was arrested Wednesday along with her boyfriend on charges that they offered to sell secrets about the company's financial picture to investment companies, authorities said.
Bonnie Hoxie, who had been a secretary to Disney's head of corporate communications, was accused of conspiracy and wire fraud along with Yonni Sebbag, also known as Jonathan Cyrus.
Hoxie, 33, was released on $50,000 bail in her first court appearance before Judge Patrick Walsh in Los Angeles, while Sebbag, 29, was ordered to be held in custody and transferred to New York.
Walsh identified Sebbag as a "flight risk" who may leave the country.
Hoxie faces a sentence of between 37 and 46 months if convicted. She is scheduled to appear in a New York City federal court on June 3.
Both defendants were represented by public defenders.
U.S. Attorney Preet Bharara said the case demonstrated that "the integrity of the securities exchanges can be compromised not only by top executives, but also by anyone entrusted with material, nonpublic information."
Disney released a statement Wednesday saying, "The Walt Disney Company has been fully cooperating with this investigation. The reference in the complaint to conversations regarding the ABC Network were and are false."
Prosecutors said Hoxie obtained information such as Disney's quarterly earnings before the results were publicly released and fed the information to Sebbag, who tried to sell the tips.
The government said the pair arranged for anonymous letters to be sent to dozens of hedge funds and other investment companies, many of which were located in Manhattan, offering to sell secrets.
George Venizelos, the acting head of the New York office of the FBI, said the majority of the hedge funds and investment companies that received the offers notified the FBI.
FBI agents then posed as hedge fund traders and offered to buy the information from Sebbag and Hoxie, prosecutors said.
The government alleged that before Disney's May 11 earnings report, the couple sent FBI agents a copy of a document titled: "The Walt Disney Company Q2 Fiscal 2010 Key Topics Speaking Points."
Prosecutors also said the defendants notified agents two hours before the public earnings announcement that Disney's results would exceed stock analysts' expectations.
Three days later, Sebbag met two undercover FBI agents in New York and accepted $15,000 in cash for the information, the government said. Prosecutors said he agreed to provide similar confidential information in the future in return for a 30 percent share of any profits from early trades.
According to the complaint, on March 15 one of the suspects volunteered information that Disney CEO Bob Iger was "in serious and advanced negotiations with two private equity firms to sell them the ABC network but no price has been determined yet."
An FBI agent responded that the information was "open source" and available on the Internet and inquired further about the earnings report.
Miller Tabak & Co. analyst David Joyce said Wednesday that speculation about the possible sale of ABC "had been percolating in the past couple months" and that the revelation was "not too surprising."
Disney shares rose 2.3 percent on Wednesday. Click here for after-hours Disney quotes.