Former SeaWorld attorney Paul Powers agreed on Tuesday to settle charges with the U.S. Securities and Exchange Commission for insider trading. In the complaint, the SEC stated Powers used confidential information that revenues would exceed analyst expectations in the second quarter of 2018 to make a profit of about $65,000.

According to the agency, Powers, of Winter Garden, Fla., received a draft of the SeaWorld earnings release on Aug. 1, 2018, which explained in detail the company’s strong financial performance. Powers used this information on Aug. 2 to purchase 18,000 shares of SeaWorld stock for about $385,592. After SeaWorld’s earnings release on August 6, SeaWorld’s shares rose approximately 17% — from $21.13 per share to $25.40 — and Powers sold all of his shares that day.

“As alleged in our complaint, Powers blatantly exploited his access to nonpublic information by misusing SeaWorld’s confidential revenue data to enrich himself,” said Kurt Gottschall, director of the SEC’s Denver Regional Office, in a press release. “Investors should feel confident in the integrity of corporate officers, particularly attorneys. The SEC is committed to swiftly pursuing insiders who breach their duties to investors.”

Powers has consented to a permanent injunction with the amounts of disgorgement and penalties, if any, to be decided by the court.

The Future of Finance Has Arrived

The pace with which finance functions are employing automation and advanced technologies is quickening. Rapidly. A new survey of senior finance executives by Grant Thornton and CFO Research revealed that, for just about every key finance discipline, the use of advanced technologies has increased dramatically in the past 12 months.

Read More

He was employed as SeaWorld’s associate general counsel and assistant secretary from approximately October 2011 until October 19, 2018, when he was terminated. As assistant secretary, he attended and took detailed notes of SeaWorld’s audit committee and revenue meetings. In order to prepare for the meetings, Powers received advance copies of the materials to be reviewed.

After several quarters of weak earnings, SeaWorld began to observe a significant improvement in its business beginning in May 2018. By mid-June 2018, SeaWorld’s internal projections anticipated that both its attendance and revenue were likely to be up more than 8% from the prior year at the close of Q2 2018.

On July 6, 2018, Powers received materials prepared for the company’s July 9 revenue committee meeting that reflected that SeaWorld had achieved those numbers. On July 31, Powers liquidated all of the equities in his personal TD Ameritrade account to fund the purchase of SeaWorld shares prior to the Aug. 6 earnings disclosure.

Powers also violated SeaWorld’s trading policy. He was only allowed to trade during a window period and was required to have his trades pre-approved by SeaWorld’s general counsel.

In a parallel action on Tuesday, the U.S. Department of Justice today announced criminal charges against Powers arising from the same conduct.

Image: Mike Aguilera/SeaWorld San Diego

, , ,

Leave a Reply

Your email address will not be published. Required fields are marked *