A former SeaWorld executive pleaded guilty to insider trading in Orlando federal court in April. He used information about SeaWorld’s earnings to make a large, profitable trade in the summer 2018. The United States Securities and Exchange Commission (SEC) investigated the employee and found that he had committed securities fraud, illegally profiting off insider knowledge that was not available to the public.
The man worked at SeaWorld’s corporate headquarters in Orlando, Florida as their associate general counsel and assistant secretary. The company, which owns and operates 12 parks throughout the U.S., experienced increased revenue from better-than-expected attendance in 2018, following years of lagging sales. In August, when the company made its revenue announcement, its stock price increased by 17 percent to $25.40 per share.
Executive Acted on Non-Public Information
In his role as a corporate lawyer for the company, he was privy to corporate meetings and internal documents showing that SeaWorld’s financial performance would exceed expectations, before the information was released to the public. On August 2, he liquidated all of the assets in his Ameritrade account in order to invest fully in SeaWorld stock, purchasing a total of 18,000 shares for approximately $385,000. He sold the shares immediately after SeaWorld’s quarterly earnings announcement four days later, earning a net profit of $65,000.
The aptly-timed transactions raised red flags with the SEC, who launched an investigation into the trades. The U.S. Department of Justice charged the man with one count of insider trading in addition to a civil complaint filed against him by the SEC. He pleaded guilty to the charge and agreed to a permanent injunction. He forfeited the $65,000 he earned on the trades, and he may face additional penalties, depending on the result of the civil suit.
Company Cooperated With Investigation
It appears that the company had no knowledge of the accused employee’s activities, and he was terminated in October after SeaWorld conducted their own investigation into the trades. A spokesperson for SeaWorld claims that the company cooperated fully with authorities. The man had been with the company for eight years prior to his termination.
The SEC requires companies to make information that could affect stock prices available to all their shareholders in a timely manner. All investors deserve the opportunity to make informed decisions about their holdings; when employees use insider information to cheat the system, they deprive other investors of that opportunity and risk severe penalties. The former SeaWorld employee is currently awaiting sentencing; the charge against him carries a maximum sentence of 20 years in prison and a $5 million fine.
Philadelphia Business Lawyers at Harty Law Group Fight for Rights of Securities Fraud Victims
The Philadelphia business lawyers at Harty Law Group have successfully represented clients in all types of securities fraud cases, including those involving insider trading. Our legal team has the knowledge and experience to protect victims of unfair trading practices and achieve the best possible outcome. With offices conveniently located in Philadelphia and Haddonfield, we provide comprehensive representation to clients throughout Pennsylvania and New Jersey. Call us today at 267-383-3899 or contact us online to discuss your case with a Philadelphia business lawyer.