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US Attorney – Walt Disney Theft Case – California Man Pleads Guilty to Insider Trading Scheme Involving Theft of Confidential Information

United States Attorney – LawFuel.com –

PREET BHARARA, the United States Attorney for the
Southern District of New York, and JANICE K. FEDARCYK, the
Assistant Director-in-Charge of the New York Office of the
Federal Bureau of Investigation (“FBI”), announced that YONNI
SEBBAG, a/k/a “Jonathan Cyrus,” pled guilty today to fraud
charges related to his participation in an insider trading scheme
in which SEBBAG and his co-conspirator BONNIE HOXIE, an assistant
to a top executive at the Walt Disney Company (“Disney”),
obtained confidential inside information, including information
about Disney’s quarterly earnings, and attempted to sell the
information to investment companies seeking to trade on inside
information. SEBBAG, 30, of Los Angeles, California, entered his
guilty plea today in Manhattan federal court before U.S.
Magistrate Judge JAMES L. COTT.

According to the Information to which SEBBAG pled
guilty, the criminal Complaint previously filed in this case, and
statements made during the guilty plea proceeding:
From March 2010 through May 25, 2010, HOXIE was
employed as a secretary to Disney’s Head of Corporate
Communications. In this capacity, HOXIE obtained material,
nonpublic information, including Disney’s quarterly earnings
statements (the “Inside Information”). In violation of HOXIE’s
duties of trust and confidence, HOXIE disclosed the Inside
Information to SEBBAG, who in turn offered to sell the Inside

Information to outside investors for the purpose of trading in
advance of the official public announcement of Disney’s earnings.
As part of the scheme, SEBBAG and HOXIE sent anonymous
letters to multiple hedge funds and other investment companies,
many of which were located in Manhattan, offering to sell the
Inside Information for purposes of illegal insider trading.
Special agents of the FBI, who were working in undercover
capacities, posed as hedge fund traders (the “Tippees”) and
agreed to buy the Inside Information from SEBBAG for purposes of
trading in advance of the public announcement of the Inside
Information.

On May 8, 2010, three days in advance of the May 11,
2010, public announcement of Disney’s earnings for the second
quarter of 2010, SEBBAG and HOXIE sent to the Tippees a
confidential document titled “The Walt Disney Company Q2 Fiscal
2010 Key Topics Speaking Points.” The document contained a
collection of talking points that Disney executives intended to
refer to while answering analysts’ questions during the May 11,
2010, earnings call.

In addition, on May 11, 2010, roughly two hours in
advance of the public announcement, SEBBAG and HOXIE notified the
Tippees that Disney’s earnings per share would be 48 cents —
which was better than what stock analysts had forecast. On May
14, 2010, SEBBAG met with two undercover FBI agents in New York
and accepted payment of $15,000 cash for having released the
Inside Information. SEBBAG further agreed that he would provide
similar confidential information in the future in return for a
30% share of any profits from the insider-trading scheme.
* * *
SEBBAG pled guilty to one count of conspiracy to commit
securities fraud and wire fraud and one count of wire fraud. The
wire fraud count carries a maximum sentence of 20 years in prison
and a maximum fine of $250,000, or twice the gross gain or loss
from the offense. The conspiracy count carries a maximum
sentence of five years in prison and a maximum fine of $250,000,
or twice the gross gain or loss from the offense. SEBBAG agreed
as part of his plea agreement to forfeit $15,000, representing
the funds he received from the undercover FBI agents.
SEBBAG is scheduled to be sentenced by U.S. District
Court Judge BARBARA S. JONES on November 16, 2010. SEBBAG is
detained pending sentencing.
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Manhattan U.S. Attorney PREET BHARARA stated: “Today
Yonni Sebbag admitted that he exploited his access to
confidential information to hatch an illegal insider trading
scheme, and he must now face the consequences. In today’s
economic landscape, we will not tolerate scams that undermine
confidence in our financial markets. Together with the FBI and
our partners on the Financial Fraud Enforcement Task Force, this
Office will vigorously pursue and prosecute insider trading to
the fullest extent of the law.”
FBI New York Assistant Director-in-Charge JANICE K.
FEDARCYK said: “Yonni Sebbag attempted to steal valuable
information from the Walt Disney Company, a place known for
having fun, and will now spend his next vacation as a convicted
felon. Stealing corporate information is a serious crime and
affects the entire country. The FBI will vigorously pursue those
who attempt this type of criminal activity.”
Mr. BHARARA praised the work of the FBI and thanked the
U.S. Securities and Exchange Commission for its assistance in the
investigation.
This case was brought in coordination with President
BARACK OBAMA’s Financial Fraud Enforcement Task Force, on which
Mr. BHARARA serves as a Co-Chair of the Securities and
Commodities Fraud Working Group. President OBAMA established the
interagency Financial Fraud Enforcement Task Force to wage an
aggressive, coordinated, and proactive effort to investigate and
prosecute financial crimes. The task force includes
representatives from a broad range of federal agencies,
regulatory authorities, inspectors general, and state and local
law enforcement who, working together, bring to bear a powerful
array of criminal and civil enforcement resources. The task
force is working to improve efforts across the federal executive
branch, and with state and local partners, to investigate and
prosecute significant financial crimes, ensure just and effective
punishment for those who perpetrate financial crimes, combat
discrimination in the lending and financial markets, and recover
proceeds for victims of financial crimes.
This case is being handled by the Office’s Securities
and Commodities Fraud Task Force. Assistant U.S. Attorney JULIAN
J. MOORE is in charge of the prosecution.
The charges contained in the Complaint against HOXIE
are merely accusations, and HOXIE is presumed innocent unless and
until proven guilty.
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