Local Police Reports

California Man Sentenced in Manhattan Federal Court to 27 Months in Prison for Insider Trading Scheme

New York-(ENEWSPF)- PREET BHARARA, the United States Attorney for the Southern District of New York, announced that YONNI SEBBAG, a/k/a "Jonathan Cyrus," was sentenced today to 27 months in prison in connection with his participation in an insider trading scheme in which SEBBAG and his co-conspirator, BONNIE HOXIE, an assistant to a top executive at the Walt Disney Company ("Disney"), obtained confidential, non-public information about Disney’s quarterly earnings. SEBBAG attempted to sell the information to investment companies seeking to trade on inside information. The sentence was imposed in Manhattan federal court by U.S. District Judge KIMBA M. WOOD.

Manhattan U.S. Attorney PREET BHARARA said: "Yonni Sebbag concocted a brazen scheme to exploit his access to valuable, non-public information by attempting to sell it to would-be investors. Sebbag is only the latest person to learn the hard way that trying to earn a quick buck through insider trading will earn you a prison sentence instead. Together with our law enforcement partners, we will continue to protect companies against those who steal and trade on their proprietary information."

According to documents previously filed in Manhattan federal court and statements made during court proceedings:

25, 2010, HOXIE was employed as a secretary to Disney’s Head of Corporate Communications. In this capacity, HOXIE obtained material, nonpublic information, including Disney’s quarterly earnings statements (the "Inside Information"), which she disclosed to SEBBAG. SEBBAG, in turn, offered to sell the Inside Information to outside investors for the purpose of trading in advance of the official public announcement of Disney’s earnings.

As part of the scheme, SEBBAG sent anonymous letters to multiple hedge funds and other investment companies, many of which were located in Manhattan, offering to sell the Inside Information for purposes of illegal insider trading. Special agents of the FBI, who were working undercover, posed as hedge fund traders (the "Tippees") and agreed to buy the Inside Information from SEBBAG for purposes of trading in advance of the public announcement of the Inside Information.

On May 8, 2010, three days in advance of the May 11, 2010, public announcement of Disney’s earnings for the second quarter of 2010, SEBBAG sent to the Tippees a confidential document titled "The Walt Disney Company Q2 Fiscal 2010 Key Topics Speaking Points." The document contained a collection of talking points that Disney executives intended to refer to while answering analysts’ questions during the May 11, 2010, earnings call.

In addition, on May 11, 2010, roughly two hours in advance of the public announcement, SEBBAG notified the Tippees that Disney’s earnings per share would be 48 cents, which was better than what stock analysts had forecast. On May 14, 2010, SEBBAG met with two undercover FBI agents in New York and accepted payment of $15,000 cash for having released the Inside Information. SEBBAG further agreed that he would provide similar confidential information in the future in return for a 30% share of any profits from the insider-trading scheme.

In addition to his prison term, Judge WOOD sentenced SEBBAG, 30, of Los Angeles, California, to two years of supervised release and ordered him to forfeit $15,000, representing the funds he received from the undercover FBI agents. During the sentencing proceeding, Judge WOOD stated: "Insider trading undermines the integrity of the security exchanges and undermines confidence in our financial markets, which are important to the well-being of everyone in this country."

SEBBAG’s co-defendant, BONNIE HOXIE, 34, of Los Angeles, California, is scheduled to be sentenced on February 22, 2011, at 11:45 a.m. before U.S. District Judge ALVIN K. HELLERSTEIN.

Mr. BHARARA praised the work of the FBI and thanked the U.S. Securities and Exchange Commission for its assistance in the investigation.

This case was brought in coordination with President BARACK OBAMA’s Financial Fraud Enforcement Task Force, on which Mr. BHARARA serves as a Co-Chair of the Securities and Commodities Fraud Working Group. President OBAMA established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney JULIAN J. MOORE is in charge of the prosecution.