Saturday, August 13, 2011

Insider Trading on Disney's planned acquisition of Marvel Comics!!

Allegedly, a 26-year-old man by the name of Toby G. Scammell has been charged with insider trading by the Securities and Exchange Commission (SEC) in relation to the acquisition of Marvel by the Walt Disney Co. back in 2009


"When Disney made public its intentions to buy Marvel for $4 billion, the comic book publisher's stock price jumped more than 25% — allowing Scammell to sell his Marvel options for a 3,000% return in less than a month, the SEC alleges." (August 12, 2011,  Dawn Chmielewski, Los Angeles Times)






Scammell has been accused by SEC of using confidential information that he “surreptitiously gleaned” (Nick Allen, The Telegraph) from his girlfriend to make $192,000 off of Disney’s 2009 acquisition of Marvel. 


"Scammell purchased $5,464 worth of options to acquire Marvel stock at prices ranging from $40 to $50 from Aug. 13 through Aug. 28, 2009. Call options afford the right to buy shares of a particular stock at a predetermined price by a particular deadline — in this case, Sept. 19 of that year. These are generally risky bets that a stock price will rise dramatically, enabling the investor to reap a profit from a relatively small initial investment." (August 12, 2011,  Dawn Chmielewski, Los Angeles Times)


It is assumed that Scammell acquired the information from his girlfriend's blackberry, e-mails, and possibly from over hearing conversations about the pending deal. Scammell's girlfriend worked as an intern in Disney's corporate strategy department in 2009, and according to the SEC filing, she had been working directly with the acquisition project.


Disney acquired Marvel Entertainment for a reported $4 billion in 2009. 




Walt Disney Co. reaction to insider trading:


"'This does not involve Disney, and the complaint speaks for itself,' a Disney spokeswoman said."  (August 12, 2011,  Dawn Chmielewski, Los Angeles Times)


According to SEC, this is not the first incident relating to insider trading with the Walt Disney Co. in recent years. In February of this year, a former assistant to a high-ranking Disney executive was sentence to four months of in house probation for giving insider information to her then boyfriend. The information was regarding the Burbank entertainment company's quarterly earnings results before they had been made public. 


Sources and more information:


http://www.sec.gov/news/press/2011/2011-166.htm


http://www.telegraph.co.uk/news/worldnews/northamerica/usa/8698763/Investor-charged-in-Disney-insider-trading-case.html


http://www.latimes.com/business/la-fi-ct-marvel-stock-20110812,0,7944805.story

http://allthingsd.com/20110811/sec-files-insider-trading-charges-in-disney-marvel-deal/

http://www.nytimes.com/2009/09/01/business/media/01disney.html

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