Bay Area Man Pleads Guilty to Securities Fraud by Insider Trading in The Walt Disney Company’s Acquisition of Marvel Entertainment
- Created on Monday, 21 April 2014 23:07
- Written by IVN
Los Angeles, California - A San Francisco man who made approximately $192,000 in profits by purchasing Marvel Entertainment Inc. stock options immediately prior to its acquisition by The Walt Disney Company in August 2009 pleaded guilty this morning to a federal securities fraud charge.
Toby G. Scammell, 29, pleaded guilty today to one count of securities fraud before United States District Judge S. James Otero.
According to a plea agreement filed in federal court, Scammell learned that Disney planned to acquire another company “that people would recognize right away” from his then-girlfriend, who was an extern at Disney in the summer of 2009 and who worked on the deal to acquire Marvel. Scammell later learned from a supervisor at his then-employer—which had periodically provided corporate consulting services to Disney and had confidentiality obligations to Disney—that Disney had previously been interested in acquiring Marvel. Scammell admitted that he learned the planned acquisition by Disney was estimated to close by Labor Day 2009, based on his observations of his girlfriend’s work schedule at Disney and their own travel plans at the time.
Scammell used the information that he learned from his girlfriend to acquire 659 call options to purchase Marvel stock for $5,465. He purchased more than half the options in his brother’s account. Scammell did not tell his girlfriend or his brother about the purchases of the Marvel call options.
Marvel’s stock rose approximately 25 percent after the deal with Disney was announced on August 31, 2009. After the acquisition was publicly disclosed by Disney, Scammell immediately sold his options, realizing more than $192,000 in profits. Scammell transferred $100,000 of the profits out of his brother’s account to conceal the trading and profits from his brother.
As a result of the guilty plea, Scammell faces a maximum statutory sentence of 25 years in federal prison when he is sentenced by Judge Otero on July 28, 2014.
Today’s guilty plea resolves a case filed in October 2013 when a federal grand jury returned an indictment that named Scammell.
Scammell was previously charged with securities fraud by the Securities and Exchange Commission in a civil lawsuit filed in August 2011. He was later ordered to disgorge his trading profits and pay civil penalties and interest totaling $800,985 in that case.
This case was investigated by the Federal Bureau of Investigation, which received assistance from the Securities and Exchange Commission.