In her job as an administrative assistant for a top executive at Disney, Bonnie Jean Hoxie was frequently given access to proprietary information about the company, including advances of earnings reports. Back in March, it dawned on her and her boyfriend, Yonni Sebbag, that someone out there might pay good money for that information. But who? Unfortunately, they didn't know anyone in finance. But then one of them had a light-bulb moment. Why not cold e-mail a bunch of hedge funds in New York? According to the SEC complaint, their message was simple and to the point.
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.
It was a foolproof plan!
Except not really. People aren't exactly taking chances with insider trading these days, at least not with strangers who can't even format the damn date properly. At least twenty hedge funds who received the letter made the wise decision to call the feds, and if anyone else got it, they didn't take them up on it, because the pair were soon e-mailing with FBI agents posing as interested traders, who then kept them on the hook for what seems like long past when they needed to. Possibly, we imagine from some of the e-mails included within the complaint, because they found the couple's bumbling antics amusing.
They did everything electronically, for one. Even gloating.
On the same day that Hoxie provided Sebbag with Disney’s confidential EPS information - and Sebbag tipped the Putative Trader - Hoxie sent Sebbag an email laying claim to a share of the unlawful profits they expected to derive from the tip. 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.
Their fee-negotiation tactics were less than professional. Sebag once wrote:
“If uh, if you don’t make so much, you know, you can always compensate me for whatever, but Yeah! 50-50 Yeah! I think that fifty-fifty is good ” “The most important thing in all that is to not get caught ””
And they weren't very good at getting their "clients" the information on time:
In a further effort to calm Sebbag, Hoxie asked in another email sent on May 11: “What would you suggest I do. If I could wave my magic wand and give you what you want - I would."
Ha. Magic wand. You don't really find villains this cartoonish outside of, well, Disney movies.
SEC Complaint [PDF — via WSJ]