SEC Charges Ex-Disney Secretary with Insider Trading; Well, She Won't Be Going to Disneyland...

Following a regulatory complaint, a former Disney (NYSE: DIS) employee and a friend have been arrested on allegations of trying to sell the company's earnings results before the official release.

Bonnie Hoxie, a former administrative assistant to a high-level executive at the company, along with the her boyfriend Yonni Sebbag sent an anonymous letter to more than 20 hedge funds in the U.S. and Europe in March. The letters were an offering of Disney's second quarter results.

Some of the hedge funds that received the letters soon thereafter alerted the Securities and Exchange Commission.

"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."

A special team of regulators within the Federal Bureau of Investigation set up a sting against Sebbag and, according to the SEC Complaint filed on Wednesday, the agency said that Sebbag offered to sell the results in one instance for $15,000 and for half of the expected trading profits on another.

According to the SEC, Hoxie had access on a regular basis to information regarding Disney's financial performance and plans for operation.

Excerpts from Sebbag's communications with FBI agents posing as investment managers released by the SEC read:

• "First of all, I am not a Fed, I have no way to prove it at this point but i am not asking you to disclose your identity not i will disclose mine. It is up to you to determine if this is worth the risk as i did. I work for Disney, that is all i can tell you."
  
• "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 don't think we will get caught if we stay discrete and careful. You can count on my discretion as I am counting on yours."
  
• "$15k sounds great and $30k even better as I hope you will make a killing from Q2 earnings. I promise I will keep you informed of any unanticipated event, I keep my ears wide open here."

The SEC also alleged that Sebbag e-mailed the undercover agents to give them access to a confidential document that contained the talking points of the company's quarterly conference call.

Sebbag met with the agents to receive payment for the information he distributed, and told them that he wanted to continue to make money from the arrangement and asked if they had advice on how to set up an offshore account to deposit the money. He left the meeting with an envelope containing $15,000 in cash.

Sebbag and Hoxie were arrested on charges of insider trading on Wednesday.

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