Former SeaWorld Executive Pleads Guilty To Insider Trading

ORLANDO, FL — A former SeaWorld executive pleaded guilty to insider trading this week after he purchased $385,592 of his then company's stock back in August based on a draft earnings report and other information that revealed the park had experienced an 8% jump in attendance and revenue during the first half of 2018 over the prior year.

Sixty-year-old Paul B. Powers of Winter Park, Florida, pleaded guilty to one count of insider trading before U.S. Magistrate Judge Leslie R. Hoffman of the Middle District of Florida. He will be sentenced before U.S. District Judge Carlos E. Mendoza at a later date.

Powers is the former associate general counsel and assistant secretary of Orlando-based SeaWorld Entertainment Inc., which is traded publicly.

“After being contacted by authorities late last year, the company conducted an investigation, which resulted in termination," said a statement released by SeaWorld. "The company cooperated fully with the authorities in their investigation.”

The guilty plea was announced by Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and Special Agent in Charge Angel M. Melendez of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations New York Field Office.

"Specifically, Powers admitted that beginning in June 2018, he received information that had been prepared for an upcoming meeting of SeaWorld’s revenue committee showing that SeaWorld anticipated both attendance and revenue to increase in the first half of 2018 by approximately 8% as compared to the first half of 2017," according to federal prosecutors.

"Powers acknowledged that he later attended revenue committee meetings at which the increase in attendance and revenue was discussed, and took notes of the meetings in his capacity as SeaWorld’s assistant secretary," federal prosecutors said. "Powers further admitted that on Aug. 1, 2018, he received materials prepared for an upcoming audit committee meeting that included a draft earnings release reporting the increased revenue and attendance figures for the first half of 2018, and also reporting that one of SeaWorld’s key earnings metrics — earnings before interest, tax, depreciation and amortization, or EBITDA — had improved 59.1 percent in the first half of 2018 as compared to the first half of 2017."

In addition to the higher profits, Powers also received a draft Securities and Exchange Commission Form 10-Q that showed SeaWorld had “reached an agreement in principle with the SEC enforcement staff" to settle a previously disclosed SEC investigation for $4 million.

"On Aug. 3, 2018, Powers attended a meeting of the audit committee at which the draft earnings release and SEC Form 10-Q were discussed, and took notes of the meeting in his capacity as assistant secretary," federal prosecutors explained.

When SeaWorld announced the better-than-expected attendance, revenue and earnings before tax, the price of SeaWorld shares soared some 17 percent — from $21.13 per share at the close of trading on Friday, Aug. 3, 2018, to $25.40 per share when the market reopened on Monday, Aug. 6, 2018.

Powers sold the 18,000 shares he purchased for $450,237, which amounted to a net profit of $64,645.

“While employed by SeaWorld, Powers benefited from revenue information not accessible to the public to make a quick profit, contrary to law and SeaWorld’s trading policies,” said Melendez.

Prosecutors said Powers liquidated all of the equities in his personal TD Ameritrade account to purchase the SeaWorld stock.

Deputy Chief Henry Van Dyck and Trial Attorney Mark Cipolletti of the Criminal Division’s Fraud Section are prosecuting the case. The Securities and Exchange Commission also assisted with the investigation.