Sea World, ex-CEO to pay $5M over fraud case

Federal regulators fined Sea World and its ex-CEO $5 million on Tuesday to settle fraud charges for misleading investors about the impact of the anti whale captivity documentary film “Blackfish.”

Sea World’s penalty is $4 million, and James Atchison must pay $1 million, the U.S. Securities and Exchange Commission announced.

The company’s former vice president of communications, Frederick Jacobs, also reached a settlement deal and will pay $100,000, a news release said.

A Sea World spokesman said the company was “pleased to have resolved this matter and to continue to focus on delivering superior guest experiences, world-class animal care and rescuing animals in need.”

The company also said it did not admit or deny guilt in the settlement and had cooperated with the SEC investigation.

Jacobs and Atchison could not be reached for comment Tuesday.

The SEC outlined how Sea World and Atchison knew that “Blackfish” — a documentary that portrayed the theme park in a negative light and told the story of orca Tilikum, which killed Sea World Orlando trainer Dawn Brancheau in 2010 — was hurting the park’s attendance.

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cember 2013 and August 2014, Atchison “made untrue and misleading statements or omissions in SEC filings, earnings releases and calls, and other statements to the press regarding Blackfish’s impact on the company’s reputation and business,” the SEC said.

It wasn’t until Aug. 13, 2014, that SeaWorld acknowledged its declining attendance was caused by bad publicity, and then its stock fell, “causing significant losses to shareholders,” the SEC said.

SeaWorld’s stock plunged 33 percent, analysts downgraded it and shareholders lost $830 million in value, the SEC complaint said.

“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,” said Steven Peikin, co-Director of the SEC Enforcement Division, in a statement.

SeaWorld and Atchison should have known “Blackfish” was hurting their business, an SEC complaint about the allegations said.

“Even before Blackfish was released in theatres in July 2013, SeaWorld’s top management was concerned about the film’s potential impact to SeaWorld’s business,” the complaint said. “Some investors also expressed concern about the film’s potential impact to SeaWorld’s business prior to the film’s release.”

In September 2013, the company conducted its annual corporate reputation study. The results fell 13 percent from the previous year, the worst score it had ever been.

But during a special, daylong meeting to discuss SeaWorld’s reputation the following week, the company’s communication team declined to bring up the results.

“As a result, SeaWorld’s then chairman of the board never saw the study and was not aware of its results,” the SEC complaint said.

By late 2013, musical acts refused to perform at SeaWorld and SeaWorld’s longest partner, who was not named but worked with the company for 25 years, declined to participate in the company’s 50th-anniversary event.

Still, Atchison, who now lives in Windermere, denied the tie between SeaWorld’s struggles to “Blackfish,” as did Jacobs, the company spokesman.

“[T]here is no truth to the suggestion that SeaWorld’s reputation or business has been harmed by ‘Blackfish,’” Jacobs told one media outlet in January 2014.

The company spokesperson then began selling his SeaWorld stock over the next four weeks, averting $84,885 in losses, the SEC said. Atchison also sold his SeaWorld stock, which kept him from losing $730,860, the SEC said.

For SeaWorld, the company is now two CEOs beyond Atchison’s tenure. John Reilly was named the interim CEO after former chief Joel Manby departed in February.

The company seeks to move beyond the “Blackfish” backlash and advertises its new thrill rides or its animal-rescue team that saves manatees, dolphins and turtles.

The first half of 2018 brought the best financial news in years as attendance improved and its stock prices rebounded to more than $30 a share.