SeaWorld (NYSE:SEAS) and its former CEO have agreed to pay more than US$5mln to settle a federal investigation into fraud charges at the marine animal theme park.
Regulators accused SeaWorld and its former CEO James Atchison of misleading investors about the impact the documentary film “Blackfish” had on the company’s reputation, the Securities and Exchange Commission said Tuesday.
The 2013 documentary sharply criticized SeaWorld’s treatment of its orcas or killer whales. The film was the subject of widespread attention in the press after it became more widely distributed in the latter half of 2013.
SeaWorld and Atchison made untrue and misleading statements or omissions in SEC filings, earnings releases and calls and other statements to the press about Blackfish’s impact on SeaWorld’s business, according to the SEC's complaint.
It wasn’t until August of 2014 that SeaWorld at last acknowledged that its declining attendance was partially caused by negative publicity stemming from the airing of Blackfish. Following the revelation, SeaWorld’s stock price fell, causing shareholders' losses to balloon.
“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 in a statement.
“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,” Peikin added.
The SEC’s complaint, filed in federal court in New York, charges SeaWorld and Atchison with violating antifraud provisions of federal securities laws and charges SeaWorld with reporting violations.
Without admitting or denying the allegations, SeaWorld and Atchison have settled with the SEC, with SeaWorld paying a US$4mln penalty and Atchison paying over US$1mln in penalties.
SeaWorld shares were flat at US$31.33 in Tuesday's afternoon trade.