SeaWorld and its former CEO, Jim Atchison, will pay more than $5 million to settle federal fraud charges that they misled investors about the impact the 2013 anti-captivity documentary "Blackfish" had on the theme park company.
The U.S. Securities and Exchange Commission, which had been investigating the Orlando, Fla.,-based company for more than a year, announced the settlement Tuesday, the same day it also filed a complaint in court outlining the fraud charges.
The SEC said that SeaWorld will be fined $4 million, and Atchison will be assessed more than $1 million in penalties and "disgorgement" related to the sale of company stock.
Both SeaWorld and Atchison have agreed to settle the SEC's charges without admitting or denying the allegations.
The SEC's complaint, filed in federal court in New York, alleged that between December of 2013 and August 2014, SeaWorld and Atchison made misleading statements or omitted from SEC filings and earnings releases information regarding the true impact "Blackfish" was having on the company's reputation and business
It was not until August of 2014 that SeaWorld acknowledged for the first time that falling attendance was due in part to negative publicity surrounding issues raised by the film, which looked at SeaWorld's treatment of its killer whales.
Following that disclosure, SeaWorld's stock price fell from $28.15 to$18.90 _ a 33 percent drop that resulted in an $830 million loss in value, the SEC complaint stated. "The announcement also widely caused analysts to downgrade SeaWorld's stock to a sell recommendation," it added.
"This case underscores the need for a company to provide investors with timely and accurate information that has an adverse impact on its business," said Steven Peikin, co-director of the SEC Enforcement Division. "SeaWorld described its reputation as one of its 'most important assets,' but it failed to evaluate and disclose the adverse impact Blackfish had on its business in a timely manner."
In its own SEC filing Tuesday, SeaWorld said it was "pleased to have resolved this matter and to continue to focus on delivering superior guest experiences, world-class animal care and rescuing animals in need."
SeaWorld's former vice president of communications, Fred Jacobs, also agreed to settle a fraud charge for his role in misleading SeaWorld's investors. He will pay disgorgement and prejudgment interest of approximately $100,000. The SEC said he was not assessed a penalty because of his "substantial assistance" in the SEC's investigation.
All of the settlements are still subject to court approval.
