SeaWorld Entertainment Inc and former Chief Executive James Atchison will pay more than $5 million to settle U.S. Securities and Exchange Commission charges that they misled investors about the negative impact of the documentary “Blackfish” on the company.
“Blackfish,” released in July 2013, had depicted as cruel the captivity and exhibition of orcas, or killer whales, including by SeaWorld.
The SEC on Tuesday said SeaWorld and Atchison downplayed the documentary’s impact from Dec. 2013 to Aug. 2014, even as bad publicity began hurting attendance and SeaWorld’s reputation.
SeaWorld’s share price tumbled 32.9 percent on Aug. 13, 2014, wiping out more than $832 million of shareholder value, after the Orlando, Florida-based company finally acknowledged the “Blackfish effect,” the SEC said.
“This case underscores the need for a company to provide investors with timely and accurate information that has an adverse impact on its business,” Steven Peikin, co-director of the SEC enforcement division, said in a statement.
SeaWorld decided in 2016 to end its orca breeding programs and phase out killer whale shows.
Without admitting or denying wrongdoing, SeaWorld agreed to a $4 million fine, and Atchison agreed to pay more than $1 million in fines and disgorgement.
The SEC said Atchison avoided $730,860 of losses by selling SeaWorld stock at inflated prices under a prearranged trading plan during the first quarter of 2014.
Both defendants had been accused of violating a federal law that lets the SEC pursue civil fraud claims based on alleged negligence, rather than an intent to defraud.
Atchison resigned as chief executive in January 2015.
In a statement on behalf of itself and Atchison, SeaWorld said it was pleased to settle, and to continue focusing on customers, rescuing animals and providing “world-class animal care.”
A former SeaWorld communications vice president, Frederick Jacobs, agreed to pay $100,000 to settle a related SEC charge. His lawyer did not immediately respond to requests for comment.
The settlements require court approval.
SOURCE: Reuters, Jonathan Stempel