Breaking news, via the SEC, from the home of Mickey Mouse on Wednesday (emphasis ours):
The SEC alleges Bonnie Jean Hoxie — an administrative assistant to a high-level Disney executive — and her boyfriend Yonni Sebbag sent anonymous letters in March 2010 to more than 20 hedge funds in the U.S. and Europe, offering to provide pre-release results of Disney’s second quarter 2010 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 (FBI) 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.
Yes, you read that right. Those evil speculators ratted on Mickey Mouse. What is the world coming to?
(As an aside, in its press release the SEC described the alleged scheme as ‘brazen’. Spectacularly dumb and amateurish could also have been used.)
Meanwhile, Jon Najarian at optionMONSTER pondered just what the pair might have been thinking:
This is just supposition, but what if these two individuals acted on the insider information they possessed? They’d have made money in November, lost big in February, as DIS didn’t budge, and then could have made big again in May.
Maybe this is why these two people sought to sell the information, as my guess is they made money on trades in November, probably lost big in February and if they traded in May, they should have made money as well, but knew the intel was more valuable to someone with better investing skills, and then these two would not have to risk their own capital.
Excerpts from Sebbag’s emails sent to FBI agents posing as investment managers provide additional insight:
# “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 discrete and careful. You can count on my discretion as i am counting on yours…”
FT Alphaville was also impressed by the posturing of one undercover agent (“UC-1″), as displayed in this email exchange (drawn from the criminal complaint filed by the Justice Department):
Bonnie and Yonni (you could not make this up…) were arrested on Wednesday. Defence counsel for the accused had not yet been assigned. Disney’s communications department — where Bonnie was a secretary — could not be reached for comment as at pixel time.
There’s so much fodder in here, what with undercover FBI agents; aliases (Sebbag a.k.a “Jonathan Cyrus”); Gmail accounts registered at a FedEx Kinko’s in California; a score of hedge funds.
Forget Wall Street II. Pixar should option the rights to Bonnie, Yonni and Mickey immediately.
Related links:
Welcome to the brave new world of insider trading investigations – FT Alphaville
Taiwan makes it harder to prosecute insider trading – FT Alphaville
Chinese takeout: FSA insider trading crackdown continues – FT Alphaville