SeaWorld Entertainment disclosed in a recent regulatory filing it has reached a $65 million settlement to resolve a previously disclosed class-action lawsuit over allegations SeaWorld executives misled investors about the impact the 2013 controversial documentary film Blackfish had on the company’s reputation and business.
In September 2018, SeaWorld and its former CEO James Atchison reached a $5 million settlement with the Securities and Exchange Commission to resolve fraud charges for misleading investors about the impact Blackfish had on the company’s reputation and business. SeaWorld’s former vice president of communications also agreed to settle a fraud charge for his role in misleading SeaWorld’s investors.
Blackfish criticized SeaWorld’s treatment of its orcas (killer whales) and received significant media attention as the film became widely distributed in the latter half of 2013. The SEC’s complaint alleged that from approximately December 2013 through August 2014, SeaWorld and Atchison made untrue and misleading statements or omissions in SEC filings, earnings releases and calls, and other statements to the press regarding Blackfish’s impact on the company’s reputation and business.
According to the SEC’s complaint, in August 2014, when SeaWorld for the first time acknowledged its declining attendance was partially caused by negative publicity, SeaWorld’s stock price fell, causing significant losses to shareholders.
In 2014, a group of shareholders filed a class-action lawsuit alleging they had been misled. After a failed attempt to have the case thrown out in 2018, SeaWorld disclosed in a Feb. 11 regulatory filing that it has reached a proposed settlement in the class-action, Baker v. SeaWorld Entertainment.
The proposed settlement, which still requires approval by the court, “requires the company to pay $65 million for claims alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as well as the costs of administration and legal fees and expenses,” the company stated.
In the filing, SeaWorld said the proposed settlement “does not include or constitute an admission, concession, or finding of any fault, liability, or wrongdoing by the company or any defendant.”