This week the FBI arrested the
administrative assistant to a high-level Disney executive and her
boyfriend. Turns out they were not the smartest couple of inside traders
out there. The SEC's complaint speaks for itself:
in early March 2010, various hedge funds, including several in New York,
received letters from an anonymous sender claiming to be able to obtain
pre-release access to Disney's 2Q-2010 quarterly earnings report and offering
to share such information prior to its public release for a fee. The letters,
post-marked from Los Angeles, California, stated:
Hi, I have
access to Disney's (DIS) quarterly earnings report before its release on
05/03/10 [sic]. I am willing to share this information for a fee that we can
determine later. I am sorry but I can't disclose my identity for
confidentiality reasons but we can correspond by email if you would like to
discuss it. My email is firstname.lastname@example.org. I count on your discretion as
you can count on mine. Thank you and I look forward to talking to you.
least twenty hedge funds, including funds based in several U.S. states and
European countries, received the same or substantially the same letter
Randomly sending letters out to hedgefunds advertizing an offer to engage in
insider trading ahead of earnings calls - that's discretion? Of course
multiple hedge funds forwarded this letter on to the FBI and they promptly set
up a sting operation. The substance of the negotiation between the
hapless boyfriend and the FBI went something like this:
But did he ask them if the
guys on the other end of the e-mail were Feds? Apparently not.
And just how profitable was this
alleged scheme for the administrative assistant who apparently risked her
career and may end up going to jail? She allegedly did it for a handbag
Hoxie stated "here is the bag that you are going to get for me - thank [sic],"
and attached a link to a picture of an expensive Stella McCartney designer
handbag available for $700 at Neiman Marcus, an upscale department store.
Sebbag replied that he would get Hoxie the bag "next week." Anticipating that
they would receive substantial compensation from the Putative Traders, Sebbag
stated "I may be able to [buy] u 2 of them, lol." Hoxie responded via email,
"In that case, i also love love these shoes" and attached a link to a picture
of expensive Stella McCartney shoes also sold at Neiman Marcus.
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