Prosecutors say Hoxie obtained information such as Disney's quarterly earnings before the information was released to the public.
Prosecutors say she gave the information to Sebbag, also known as "Jonathan Cyrus." The couple is accused of sending anonymous letters to dozens of hedge funds and other investment companies, offering the information for sale.
Many of the companies contacted the FBI. Agents posing as hedge fund traders offered to buy the information from the couple.
Prosecutors say before Disney's May 11 earnings report was released, the couple sent FBI agents a copy of a report entitled "The Walt Disney Company Q2 Fiscal 2010 Key Topics Speaking Points." And prosecutors say hours before the earnings announcement, the couple notified agents that Disney's earnings per share would be 48 cents, which was better than what stock analysts had predicted.
"If you have that information in advance, it gives the insider the ability to either sell or buy the stock in advance of the information being disclosed to the public, giving an unfair advantage to those who possess the information. This information is extremely important," said Kerry Fields, an attorney and professor of business law and ethics at the USC Marshall School of Business.
According to the government, three days later Sebbag met with two undercover FBI agents in New York and accepted $15,000 in cash. He allegedly agreed to provide similar confidential information in the future in return for a 30 percent share of any profits from trades.
"There had not been any damage to the Walt Disney company nor to the market itself because this conspiracy was intercepted before any damage could be done," said Fields.
The complaint also alleges that one of the suspects volunteered information that Disney CEO Bob Iger was in serious talks to sell the ABC television network to private equity firms but that no price had been determined yet.
Wednesday, Disney denied that the conversations about the sale of the network ever took place and released a statement saying, "The Walt Disney Company has been fully cooperating with this investigation. The reference in the complaint to conversations regarding the ABC Network were and are false."
Hoxie has been released on $50,000 bail and Sebbag has been detained. The case has now been moved to New York. The two will appear in court again on June 3. If convicted, Hoxie and Sebbag could face up to 25 years in prison and fines of up to $250,000.
Disney is the parent company of ABC7.
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