SeaWorld Entertainment's former associate general counsel, who was fired last October, pleaded guilty Tuesday to a federal charge of insider training that allowed him to make nearly $65,000 from a stock sale last year.
Paul B. Powers, 60, who also held the title of assistant secretary with the Orlando-based theme park company, entered his plea before a U.S. District judge in Florida. Sentencing has not yet been determined.
On the same day that the Department of Justice announced the guilty plea, the Securities and Exchange Commission said that it had also charged Powers with insider trading based on confidential information he received that SeaWorld's revenue would be better than anticipated for the second quarter of 2018.
SeaWorld, which for years had been suffering from a steady decline in revenue and attendance, reported last August that attendance jumped nearly 5 percent in the second quarter, with 290,000 more guests visiting SeaWorld's 12 parks than in the same quarter in 2017. The numbers were even better for the first half, with total visitation surging by 8 percent.
Powers has admitted that as early as June of last year he received internal information that the company anticipated both attendance and revenue to rise by roughly 8 percent for the first half of 2018, the Department of Justice reported.
He later liquidated all of his equities in a personal TD Ameritrade account in order to purchase 18,000 shares of SeaWorld stock on Aug. 2 at a cost of $385,592, Powers admitted. Once the upbeat earnings were released the morning of Aug. 6, Powers sold all his shares for $450,237, realizing a net profit of $64,645, the Department of Justice and SEC complaint reported.
By the close of the market that day, SeaWorld's stock price rocketed to $24.69, an increase of nearly 17 percent. It was at the time the highest price recorded in four years.
"The Department of Justice and our law enforcement partners will hold executives accountable for their criminal conduct, particularly conduct that threatens the integrity of our capital markets," said Assistant Attorney General Benczkowski.
Meanwhile, the SEC's complaint, filed in federal district court in Orlando, charges Powers with fraud. A news release from the SEC says Powers has consented to a proposed settlement that will allow a court to decide the amount of penalties and money that would have to be repaid. The proposed settlement is subject to court approval.
"As alleged in our complaint, Powers blatantly exploited his access to nonpublic information by misusing SeaWorld's confidential revenue data to enrich himself," said Kurt Gottschall, director of the SEC's Denver Regional Office. "Investors should feel confident in the integrity of corporate officers, particularly attorneys. The SEC is committed to swiftly pursuing insiders who breach their duties to investors."
