2 arrested on Disney insider trading charges

An assistant to Walt Disney Co.'s head of corporate communications was arrested with her boyfriend and accused of leaking confidential stock tips about the entertainment company's earnings.

U.S. prosecutors in Manhattan Wednesday charged Bonnie Hoxie, the assistant to Zenia Mucha, and Yonni Sebbag, Hoxie's boyfriend, with sending letters in March to at least 33 investment companies, including hedge funds, offering to sell confidential Disney information.

"The integrity of the securities exchanges can be compromised not only by top executives but also by anyone entrusted with material, nonpublic information," U.S. Attorney Preet Bharara said in a statement announcing the arrests.

Disney, based in Burbank, Calif., is the world's biggest media company.

Hoxie, 33, and Sebbag, 29, were arrested Wednesday in Los Angeles. The U.S. Securities and Exchange Commission also sued them Wednesday.

"Hoxie and Sebbag stole Disney's confidential pre-release earnings information and put it up for sale," Robert Khuzami, the SEC's enforcement director, said in a statement. "Fortunately, multiple hedge funds reported the illicit scheme, and the SEC and criminal law enforcement authorities acted quickly to stop this brazen attempt to establish an ongoing insider-trading business." None of the funds acted on the tips, according to a person familiar with the matter.

"The Walt Disney Company has been fully cooperating with this investigation," the company said.

On March 11 an undercover agent with the FBI began reaching out to the pair, according to a criminal complaint filed in Manhattan. On May 8 the two gave undercover FBI agents an internal Disney "talking points" document that the company planned to use during its earnings presentation, according to the complaint.

Three days later they passed along Disney's earnings per share, prosecutors said in the complaint. On May 14 Sebbag got a $15,000 cash payment from two undercover agents at a meeting at an unidentified Long Island location, prosecutors said.

The complaint doesn't mention Mucha, Hoxie's former boss at Disney, or suggest that the head of the company's corporate communications unit engaged in any wrongdoing. Before joining Disney in 2002, Mucha was press secretary to New York Gov. George Pataki. From 1986 to 1992, she managed two successful campaigns for U.S. Sen. Alfonse D'Amato, a New York Republican. Mucha didn't immediately return calls and e-mail messages seeking comment.