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Department of Justice Opens Criminal Investigation into SeaWorld


The U.S. Department of Justice recently announced that it has launched a criminal investigation into the company SeaWorld based on a 2014 lawsuit filed by SeaWorld investors, who claim that the company lied to them about the financial impact of the documentary “Blackfish” (i.e., that the company committed fraud insofar as providing misinformation to its investors).

On August 25, the Department filed a motion to intervene in the 2014 civil lawsuit filed by the shareholders, asking the judge to delay depositions in case they might implicate and/or negatively affect the ongoing criminal investigation.

After the documentary criticizing the company’s practices aired in 2013, reportedly, the company experienced a 4.3 percent decline in attendance, which the company’s CEO instead attributed to bad weather, the holidays, and higher admission prices. At the same time, the CEO also sold 154,000 shares of his personal holdings in the company’s stock, making a profit of $4,662,235, according to the civil lawsuit filed. In August 2014, after the company announced poor quarterly results, its stock price plummeted nearly 33 percent.

Affirmative Defense to Illegal Insider Trading Claims

Legally, corporate executives have access to crucial information–such as whether a company is subject to an investigation or involved in a significant transaction–before it is disclosed to investors.  CEOs are somewhat protected from accusations of illegal insider trading pursuant to a Rule 10b5-1 trading plans, which allow them to schedule predetermined stock transactions prior to receiving any insider information. The rule was established by the Securities Exchange Commission to explicitly allow insiders of publicly traded companies to establish a trading plan for selling their own stocks. In effectively allows major holders to sell a predetermined number of shares at a predetermined time and shields them from related white collar crime accusations; in other words, it protects an executive from liability even if trades are executed after they become aware of material, nonpublic information that would otherwise subject them to insider trading claims.

However, an increasing number of both federal and state courts all over the country have, at times, rejected 10b5-1 trading plans as an affirmative defense, warranting anyone who is potentially under investigation for illegal insider trading to work with an experienced attorney from the outset of any suspicion or investigation. For example, the courts have held that stock sales were not per se lawful pursuant to 10b5-1 trading plans if the executive modified their trading plans on various occasions while in possession of inside information about the business.

White Collar Crime Defense Lawyers

If you are being investigated for or have been accused of a white collar crime, you need to work with a trusted legal advocate who can successfully defend you.

At the Baez Law Firm, we have years of experience defending clients facing a wide range of high-profile criminal charges like these. Our white collar crime lawyers provide the highest quality legal representation for those facing white collar crime accusations throughout Florida and Massachusets. Contact us today to find out more.


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