SEC v. SeaWorld Entertainment and James Atchison
Case No. 1:18-CV-08480 (S.D.N.Y.)
SEC v. Frederick D. Jacobs
Case No. 1:18-CV-08482 (S.D.N.Y.)
On September 18, 2018 the Commission filed a Complaint (the “Compliant”) against SeaWorld Entertainment, Inc. (“SeaWorld”) and SeaWorld’s Former Chief Executive Officer, James Atchison (“Atchison”) (collectively, “Defendants”). The Complaint alleged that Defendants made untrue and misleading statements or omissions in Commission filings, earnings releases and calls, and other statements to the press regarding the documentary film Blackfish's impact on the company's reputation and business (i.e., “Blackfish effect”). Blackfish criticized SeaWorld’s treatment of its orcas (killer whales). The film was released in theaters in July 2013, and received significant media attention that escalated as the film became more widely distributed. Between approximately December 20, 2013, and August 13, 2014 (the “Relevant Period”), in connection with the offer and sale of SeaWorld securities, Defendants engaged in a course of business that—by failing to disclose the Blackfish effect to investors— they should have known would operate as a fraud or deceit upon the purchasers of SeaWorld stock. According to the Complaint, from January through March 2014, Atchison sold SeaWorld stock pursuant to a Rule 10b5-1 trading plan he had entered into prior to the Relevant Period. SeaWorld’s stock price was inflated as a result of Atchison’s conduct, allowing him to avoid losses of approximately $730,860 on his sales.
On August 13, 2014, SeaWorld, for the first time, acknowledged that its declining attendance was, among other factors, partially caused by negative publicity connected to Blackfish. SeaWorld’s stock price fell approximately 33% causing a loss of approximately $830 million in shareholder value. See Complaint.
On the same day, the Commission filed an additional Compliant, against SeaWorld’s former Vice President of Communications, Frederick D. Jacobs (“Jacobs”). The Commission alleged that Jacobs, on January 13, 2014, just prior to selling his SeaWorld stock, made an untrue statement of material fact and/or omitted material facts from his statement. By selling his stock, Jacobs avoided losses of approximately $84,885 on his sales. See Complaint.
The Court entered final judgments against the defendants in both civil actions ordering them to pay a collective total of $5,099,338 in disgorgement, prejudgment interest and civil penalties, which has been paid in full. In each of the final judgments, the Commission was ordered to hold all funds, together with interest and income earned thereon, pending further order of the Court. See SeaWorld’s Final Judgment, Atchison’s Final Judgment, and Jacobs’ Final Judgment.
On December 4, 2020, the Court entered an Order consolidating the two civil actions for the purpose of distributing the total funds paid to harmed investors. See the Court’s Order.
On December 15, 2020 the Court entered an Order establishing a Fair Fund, appointing Miller Kaplan Arase LLP as Tax Administrator and JND Legal Administration as Distribution Agent for the Fair Fund. See the Court’s Order.
For more information, please contact the Commission:
Office of Distributions