An assistant to a top executive at Walt Disney Co. was arrested Wednesday along with her boyfriend on charges that they offered to sell secrets about the company's financial picture to investment companies, authorities said.
Bonnie Hoxie, who had been a secretary to Disney's head of corporate communications, was accused of conspiracy and wire fraud along with Yonni Sebbag, also known as Jonathan Cyrus.
Hoxie, 33, and Sebbag, 29, were awaiting an initial appearance Wednesday in federal court in Los Angeles, where they reside. It was not immediately clear who would represent them in court.
U.S. Attorney Preet Bharara said the case demonstrated that "the integrity of the securities exchanges can be compromised not only by top executives, but also by anyone entrusted with material, nonpublic information."
Disney said in a statement that it "has been fully cooperating with this investigation."
Prosecutors said Hoxie, who had been employed at Disney since Dec. 18, 2007, obtained information such as Disney's quarterly earnings before the results were publicly released and fed the information to Sebbag, who tried to sell the tips to at least 33 investment companies.
The government said the pair arranged for anonymous letters to be sent in early March to dozens of hedge funds and other investment companies, many of which were located in Manhattan, offering to sell secrets.
George Venizelos, the acting head of the New York office of the FBI, said the majority of the hedge funds and investment companies that received the offers notified the FBI.
FBI agents then posed as hedge fund traders and offered to buy the information from Sebbag and Hoxie, prosecutors said.
The government alleged that before Disney's May 11 earnings report, the couple sent FBI agents a copy of a 107-page document titled: "The Walt Disney Company Q2 Fiscal 2010 Key Topics Speaking Points." Prosecutors also said the defendants notified agents two hours before the public earnings announcement that Disney's results would exceed stock analysts' expectations.
Three days later, Sebbag met two undercover FBI agents in New York and accepted $15,000 in cash for the information, the government said. Prosecutors said he agreed to provide similar confidential information in the future in return for a 30 percent share of any profits from early trades.
If convicted, Hoxie and Sebbag would each face up to 25 years in prison and fines of $250,000 or twice the amount that was gained or lost in the scheme.
According to the complaint, on March 15 one of the suspects volunteered information that Disney CEO Bob Iger was "in serious and advanced negotiations with two private equity firms to sell them the ABC network but no price has been determined yet."
An FBI agent responded that the information was "open source" and available on the Internet and inquired further about the earnings report.
Disney denied the sale rumors directly Wednesday.
"The reference in the complaint to conversations regarding the ABC Network were and are false," the company said.
Miller Tabak & Co. analyst David Joyce said speculation about the possible sale of ABC "had been percolating in the past couple months" and that the information in the complaint was "not too surprising" even if it were true.
Disney shares rose $1.12, or 3.5 percent, to $33.44 in afternoon trading Wednesday, largely in line with gains in other media companies.
In a related complaint filed in federal court in Manhattan by the Securities and Exchange Commission, the SEC said Hoxie sent Sebbag an e-mail on the same day she divulged Disney's earnings per share, saying she expected to receive an expensive Stella McCartney designer handbag as a gift from Sebbag in return.
Anticipating a large payoff, Sebbag responded: "I may be able to (buy) u 2 of them, lol," the SEC said.
It said Hoxie answered: "In that case, i also love love these shoes" and attached a link to a photograph of expensive Stella McCartney shoes.