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 firstname.lastname@example.org. 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.