This week, the Securities and Exchange Commission announced that SeaWorld Entertainment and its former CEO have agreed to pay more than $5 million to settle fraud charges. The charges stem from the company and CEO misleading investors about the impact of the documentary film Blackfish on the company’s business and reputation. The company’s former vice president of communications has also agreed to settle a fraud charge for his involvement in misleading company investors.
Blackfish brought attention to and criticized the company’s treatment of orcas. The SEC’s complaint accuses SeaWorld and former CEO, James Atchison, of making untrue and misleading statements or omissions in SEC filings, earnings calls, earning releases and other statements to the press regarding the documentary’s impact from roughly December 2013 through August 2014. The complaint explains that on August 13, 2014 the company first acknowledged that its declining attendance was in part caused by the negative publicity brought by the documentary.
As a result, SeaWorld’s stock fell causing shareholders to lose significant amounts. The SEC’s complaint was filed in federal court in New York. It charges SeaWorld and Atchison with violating antifraud provisions of the federal securities laws. SeaWorld was also charged with reporting violations. Both parties have agreed to settle the charges without admitting or denying the allegations. SeaWorld will pay a $4 million penalty.
Atchison will pay more than $1 million in penalty and disgorgement. The company’s former vice president of communications, Frederick D. Jacobs, has agreed to pay approximately $100,000 to settle a fraud charge. Further details can be found here.