Ten months after revealing it was the subject of a federal investigation, SeaWorld said late Thursday that the Securities and Exchange Commission had recently warned that it intends to take some sort of enforcement action.
Both the SEC and Department of Justice sent subpoenas in mid-2017 to SeaWorld related to an investigation “concerning disclosures and public statements made by the company and certain executives and/or individuals on or before August 2014, including those regarding the impact of the ‘Blackfish’ documentary, and trading in the company’s securities,” the company said in a June 2017 regulatory filing.
In a new filing Thursday, the beleaguered theme park operator said it received a notice on April 6 that SEC staff had “made a preliminary determination to recommend to the commission that a civil enforcement action or administrative proceeding be brought against the company.”
The proposed action, according the filing, would allege that SeaWorld violated federal securities laws.
“The staff’s recommendation may involve various civil or administrative actions or proceedings, and may seek remedies that include an injunction, a cease-and-desist order, disgorgement, pre-judgment interest and civil money penalties,” the filing said.
The Justice Department investigation appears to still be ongoing; this week, a federal judge agreed that depositions for former executives in a civil lawsuit should be delayed at the request of officials involved in the criminal probe, the Orlando Sentinel reported.
SeaWorld pointed out that the SEC notice itself was not a formal allegation or finding of wrongdoing, and said that it would continue to cooperate and planned to respond with reasons it believes action should not be taken.
No current employees at SeaWorld received a notice, the filing said. Executives downplayed the impact of the documentary, which was brutally critical of its treatment of captive orcas, after it was released in 2013. They did not acknowledge until August of the following year that the movie hurt attendance and finances.
Jim Atchison, who was CEO at the time, left the job in January of 2015. His replacement was Joel Manby, who sought to turn the company’s fortunes around by ending the orca breeding program, moving killer whale shows away from an entertainment focus, and emphasizing rides and rescue operations. The company’s portfolio of 12 theme and water parks includes SeaWorld, Busch Gardens, and Sesame Place.
The recovery efforts were unsuccessful, and most quarterly earnings reports just brought more bad news on the attendance and revenue fronts. Manby resigned in February, followed by the chief creative officer and chief marketing officer he brought in.
Manby’s immediate replacement was interim CEO John Reilly, a longtime SeaWold employee who has said he wants to return some attention to the animals at the parks.
“We’ve competed successfully there over time for decades and we really believe that we have to do a better job talking about our differentiated product,” he said during his first earnings call in February. “We have an irreplaceable animal collection. It’s a unique guest experience that you can’t find in any of the [other] Orlando parks. So I think what you’ll see us do going forward is better communicating the differentiators that set us up well versus our competitors.”