SeaWorld Entertainment Inc. and its former CEO James Atchison agreed to pay more than $5 million settlement involving fraud charges for misleading investors about the gravity of impact that the documentary film Blackfish brought the company. Also paying is SeaWorld's former vice president of communications Frederick Jacobs for agreeing to orchestrate the cover-up.
Specifically, SeaWorld Entertainment will pay $4 million penalties while Atchison will pay $1 million in penalty and disgorgement. Jacobs agreed to settle the charges and pay disgorgement and prejudgment interest of about $100,000. SEC said it did not assess a penalty for Jacobs for it recognized the former vice president's important help in the investigation.
The U.S. Securities and Exchange Commission said the involved parties agreed to pay the settlement without admitting guilt or asserting their innocence regarding the charges. SEC clarified that all announced fees are still subject to court approval.
The issue arises following the release of Blackfish in 2013. The film criticized SeaWorld's form of entertainment at the expense of marine mammals just to sustain its multi-billion dollar sea-park market.
SEC's complaint stated that from December 2013 through August 2014, SeaWorld, Atchison, and Jacobs made misleading statements and omissions in its SEC filings, earnings releases and earnings calls within the period. SeaWorld had also issued insincere press releases that downplayed the true impact of 'Blackfish' in its reputation and business.
SeaWorld had only admitted that the declining attendance in the park was due to people's negative reception of what Blackfish has presented on Aug. 13, 2014. At this time, the company had already been deep in negative publicity and plummeting stock price. This resulted in significant losses among shareholders.
In its statement, SEC underscored the importance of transparency where companies should provide investors with timely and accurate information on issues that impact the business and their ventures. Steven Peikin, Co-Director of the SEC Enforcement Division, said SeaWorld's conduct contradicted the company's claim that its reputation is its most valuable assets.
In its response, SeaWorld said it was more than pleased that the issue has reached its conclusion. The company can now move forward and focus on delivering superior entertainment, upholding its world-class animal care, and rescuing threatened animals.
Blackfish was produced and presented by Magnolia-CNN films. The film rose to fame in the latter half of 2013 when more people became involved with the truth that it presented.
The documentary follows the life of a killer whale named Tilikum. The animal was a great performer but had also been accountable for several deaths in the water park. The most gripping story in the documentary was about a park trainer dragged by Tilikum into the water. The trainer got drowned and dismembered by Tilikum as park guests watched in horror. The incident took place in 2010.
SeaWorld ended its shows that feature killer whales. It also stopped its orca breeding programs in the same year.
