SeaWorld Likely to Face SEC Claims Over Misleading Investors
(Bloomberg) -- SeaWorld Entertainment Inc. will probably face civil charges that it violated securities laws several years ago, when the company was dealing with scrutiny over its treatment of captive killer whales.
The U.S. Securities and Exchange Commission sent a Wells notice to the Orlando, Florida-based theme-park operator on April 6 regarding “certain disclosures and public statements made by the company and certain individuals on or before August 2014,” according to a filing Thursday. The Justice Department is also investigating, SeaWorld said last June.
Attendance at the company’s parks tumbled after the 2013 documentary “Blackfish” raised questions about the orcas in SeaWorld’s care. Sales and earnings declined for years in its wake and the company experienced several rounds of management upheaval, with the most recent chief executive officer stepping down in February.
SeaWorld said it’s cooperating with the SEC and plans to tell agency staff why no action should be taken. The company’s shares tumbled 4.2 percent to $14.75 in extended trading. The stock has climbed 13 percent this year.
A campaign against the company, fueled by animal activists, prompted entertainers to cancel appearances at SeaWorld parks and corporate sponsors such as Southwest Airlines Co. to drop their association with the business.
Yet SeaWorld executives maintained for months that the documentary and protests were not hurting attendance. It wasn’t until August 2014, after a California assemblyman proposed legislation that would have banned orca shows, that SeaWorld conceded negative publicity was crimping visitation.
The company is already facing a shareholder lawsuit saying it misled investors. Attorneys for the Justice Department’s fraud section asked to extend a stay of discovery in that case last week as they pursue a criminal investigation.
Chief Executive Jim Atchison was replaced in 2015 by Joel Manby, who formerly ran the Dollywood theme park. Manby eliminated orca breeding and designed new shows that feature the whales performing more natural routines. Blackstone Group, which had purchased SeaWorld in a leveraged buyout, sold the last of its shares to Chinese theme park operator Zhonghong Zhuoye Group Co. last year.
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