UPDATE AT 6:15 PM: More details have surfaced in the shocking indictment of Bonnie Hoxie– the administrative assistant to Disney corporate communications head Zenia Mucha—and Hoxie’s boyfriend Yonni Sebbeg for allegedly trying to peddle an early quarterly report to hedge funds for cash payment. In the annals of insider trading, this one has to fall under the category of Dumb and Dumber.

The SEC complaint is a riveting read, driven by the dialogue supplied by the duo as they tried to orchestrate the delivery of earnings information to FBI agents posing as hedge fund managers.The SEC listed both verbal conversations with the undercover agents, and email correspondence between the suspects.

After sending inside earnings info to Sebbag, Hoxie sent him an email about what she wanted in return. “Here is the bag that you are going to get for me…” she wrote, attaching a link to a picture of a $700 Stella McCartney designer handbag from Neiman Marcus. After Sebbag responded he might walk away with enough cash to buy two bags, she added: “In that case, I also love love these shoes,” attaching a link to a picture of pricey Stella McCartney shoes.

Sebbag’s phone correspondence with the undercover agents is also telling. After claiming he worked at Disney and that he could deliver  earnings reports 3 to 4 days before release, he asked the hedge fund managers to “make an offer based on the capital gains from the trade and the risk I am taking delivering this information to you.”  He later got down to numbers: “I was thinking that $20,000 is a fair compensation but you are free to make an offer.”

More money talk: “I am very serious and I will show you that very soon. $15,000 sounds great and $30,000 even better as I hope you will make a killing from Q2 earnings.”

Delivering the ill-gotten info proved to be problematic and led to an exchange of testy emails between Hoxie and Sebbag. Sebbag, who promised to deliver the earnings two to three hours before the close of the market on May 11, was frustrated that Hoxie was delayed in obtaining the report. Her response: “If I could wave my magic wand and give you what you want—I would. However, since that is not going to happen I suggest you call on your inner Buddhist—and CHILL the fuck out.”

They wound up delivering only bits of information from the report, for which Sebbag was paid $15,000 in cash on May 14. At that point, he confessed that he didn’t work for Disney, but that his girlfriend was a secretary for “one of the top three or four executives at Disney.” Sebbag asked for advice on how to open an offshore account to stash the cash, stating he “didn’t want to go to jail.” He said he would  travel to Israel to open an account, and suggested future discussions should be done via prepaid cell phones to avoid detection. He walked away with the cash and he and Hoxie were arrested today.

PREVIOUS BREAKING NEWS AT 11:51 AM: The announcement by the Securities and Exchange Commission and the FBI that it had arrested a Disney employee and her boyfriend for allegedly trying to sell insider information from the corporation’s quarterly report brings a fresh new angle to the ongoing discussion over whether Capitol Hill should allow the establishment of  businesses to sell futures contracts based on the box office performances of major films.

Bonnie Jean Hoxie is identified in the SEC complaint as a secretary to a “high ranking Disney executive” (corporate spokeswoman Zenia Mucha) whose position gave her early access to the earnings report. Hoxie and boyfriend Yonni Sebbag are charged with circulating anonymous letters to about 20 hedge funds beginning in March, and offering to leak inside information about Disney’s quarterly earnings for a fee. Hoxie allegedly got pre-release results for Disney’s second quarter, gave it to Sebbag, who sold the confidential information to an undercover agent from the FBI who posed as an investment manager, according to the SEC complaint. The defendants face up to 20 years in prison if found guilty. That is a stiff sentence considering reports had Sebbag selling the data for $15,000.

Detractors of the proposed program by Cantor Fitzgerald and Media Derivatives is that the futures business could potentially create a value for intelligence gleaned at test screenings, or within studios where last minute changes on movies  could impact grosses. According to the FBI, most if not all of the hedge funds immediately turned over the anonymous letters that made the arrests possible. But box office futures certainly widens the potential for trouble.

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