SeaWorld and former CEO fined $5 million for ‘Blackfish’ fallout

By FOX BUSINESSFOXBusiness

SeaWorld Entertainment and one of the company’s former CEOs have agreed to pay a $5 million fine to settle fraud charges for misleading investors about the impact the documentary film “Blackfish” was having on the business.

The fine was announced Tuesday after the SEC filed a complaint in federal court in New York, charging SeaWorld and former CEO James Atchison with violating antifraud provisions of federal securities laws. The complaint alleged that from approximately December 2013 through August 2014, SeaWorld and Atchison made untrue and misleading statements or omissions in SEC filings, earnings releases and calls, and other statements to the press regarding the documentary’s impact on the company’s reputation and business.

SeaWorld’s former vice president of communications also agreed to settle a fraud charge for his role in misleading investors.

In 2013, “Blackfish” documented and criticized SeaWorld’s treatment of its orcas (killer whales) and received significant media attention after the film’s debut.

According to the SEC’s complaint, it took over a year before SeaWorld would acknowledge that its declining attendance was partially caused by the negative publicity from the film. When it did on Aug. 13, 2014, SeaWorld’s stock price fell, causing significant losses to shareholders.

“This case underscores the need for a company to provide investors with timely and accurate information that has an adverse impact on its business. 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,” Steven Peikin, co-director of the SEC Enforcement Division, said in a statement.

SeaWorld agreed to pay a $4 million penalty, while Atchison agreed to pay over $1 million in penalty and disgorgement. SeaWorld’s former vice president of communications, Frederick D. Jacobs, agreed to settle a fraud charge and to pay disgorgement and prejudgment interest of approximately $100,000. He was not assessed a penalty.