The SEC and U.S. attorney's office charge a former Disney employee with insider trading | Business

Is it wrong to be relieved that some white-collar crime is still old-fashioned and easy to understand?

Today authorities arrested two people charged with trying to sell information about upcoming Disney earnings to hedge funds. According to the SEC complaint, Bonnie Jean Hoxie, an assistant to a Disney executive (who Dow Jones identifies as corporate communications head Zenia Mucha), worked with her boyfriend, Yonni Sebbag, to approach hedge funds with the offer of advance information about Disney’s quarterly earnings in exchange for a fee. This is the text of the letter they allegedly mailed out:

Hi, I have access to Disney’s (DIS) quarterly earnings report before its release on 05/03/10 [sic]. I am willing to share this information for a fee that we can determine later. I am sorry but I can’t disclose my identity for confidentiality reasons but we can correspond by email if you would like to discuss it. My email is eilatcap@gmail.com. I count on your discretion as you can count on mine. Thank you and I look forward to talking to you.

The deal went down earlier this month.

Two days before Disney’s second quarter earnings announcement, Sebbag emailed out a 107-page document with talking points for the conference call. On May 11, Hoxie told Sebbag earnings would come in at 48 cents per share—higher than many analysts thought. Sebbag called up a hedgie and passed along the information.

Except the person Sebbag called didn’t actually work at a hedge fund. He worked for the FBI. Flash forward to today: Hoxie and Sebbag are arrested.

But here’s the part of the story that makes me incrementally less cynical about the world. From Dow Jones:

The SEC said at least 20 hedge funds in the U.S. and Europe received the letters.

“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. “Fortunately, multiple hedge funds reported the illicit scheme, and the SEC and criminal law enforcement authorities acted quickly to stop this brazen attempt to establish an ongoing insider trading business.”

The hedgies turned ‘em in. Nice, right? I mean, more often than not it seems the hedge funds are at the center of the problem. Of course, from the outset, this had the trappings of a novice operation. Maybe when the big boys play at insider trading, they like to keep it in the family.

Or maybe it’s a good little reminder that there are decent, law-abiding people in every industry even when it’s easier to demagog.

Small Dairies Go Under as Milk Prices Sink Again

PLAINFIELD, Vt. — The MacLaren brothers are third-generation dairy farmers, but they will likely be the last in their family.

After working all their lives on the hillside farm in Vermont that their grandfather bought in 1939, rising to milk cows at 3 a.m., even in blizzards and sub-zero temperatures, they decided to call it quits, auctioning off their roughly 200 cows and equipment ranging from stalls and hoof trimmers to tractors and steel pails.

The Term “Pink Collar” Is Silly And Outdated — Let’s Retire It

You can’t throw a stone around the internet today (if that’s even possible?) without running into the New York Times’ new study on so-called “pink-collar jobs.” The report found that over the last decade more and more men have flocked to traditionally female-dominated career fields like nursing and teaching. Fascinatingly, the study disproves the commonly held belief that this transition is the result of the recession, proving that men’s migration into the pink isn’t out of some alleged desperation. Men want those jobs.

deconstructiva

Alas, Barbara, there may be a more cynical reason: if someone can gain an unfair advantage from this illegal info. – and no one else can or will allow others to get that same unfair advantage – then someone else will rat ‘em out. In this case some fundies know the risk of obtaining this info. is too high so they make sure no one else can use this either. Pure CYA defense, not decent law-abiding purity. Sorry for cynicism but please prove me wrong; too many swamp posts make me believe Wall Street is more than just a movie.
waltwriston

“Except the person Sebbag called didn’t actually work at a hedge fund. He worked for the FBI.”

Wow! I don’t think such a move could be called any type of crime, less stupidity counts?!
Barbara Kiviat

A good point.
doubleang

I would have been surprised if anyone had actually bitten on that.
Too much risk. They were incented to report it out of self preservation. Consider:
1. What if its phony? What if someone is attempting to sting the hedges? Even if they didnt have actual information, if the hedge bit and it was just some yahoo looking to prove the hedges are corrupt, its too big a risk.
2. What if it is real (as it was in this case): This seems like a version of the prisoners dilemma. You can probably assume that multiple people were also contacted. If one of them rats to the Feds, everyone who bought the info would be busted.