SeaWorld Reaches $5M Settlement Agreement in “Blackfish” Effect Case

On September 18, 2018, the U.S. Securities and Exchange Commission announced that SeaWorld and its former CEO, James Atchison, have agreed to pay $5M “to settle fraud charges for misleading investors about the impact the documentary film Blackfish had on the company’s reputation and business.” Although the SEC’s settlement still needs to be approved by a federal judge, the debate over orca captivity continues to remain a controversial topic.

In 2010, killer whale Tilikum killed its trainer at SeaWorld in Orlando, Florida. The emotional documentary “Blackfish” focuses on Tilikum’s story, showing the negative impact these intelligent creatures endure when they are taken from their pods in the wild to be raised in the captivity of an aquatic park. SeaWorld announced on March 17, 2016 that it would end its orca breeding program as well as its entertainment shows 3 years after the film’s release. As animal rights activism gained momentum, the Blackfish movement gained support from PETA (People for the Ethical Treatment of Animals). PETA has targeted SeaWorld as far back as 1998, but when the film premiered, PETA donations increased.

As a consequence to the film’s release, SeaWorld’s attendance dropped. Hence, the “Blackfish effect,” what the SEC calls, “a spiraling crisis that threatened SeaWorld’s reputation.” The SEC further asserted that SeaWorld and Atchison should have known by December 2013, that the film’s depiction of the killer whales living conditions along with trainer attacks, would adversely affect the company. Despite SeaWorld’s filing reports of December 2013 and August 2014 showing a decline in the park’s attendance, SeaWorld denied that the Blackfish effect had influenced the company. Additionally, in December 2013, according to the SEC, “Atchison sent an internal email expressing concern that the film had led a number of musical acts to cancel performances at its parks.”

The company was charged with misleading investors over the documentary’s impact. SeaWorld should have addressed their loss, for “the law requires publicly traded companies to inform investors of circumstances that could materially affect their business.”


Sources:

https://nytimes.com/2018/09/19/business/seaworld-blackfish-fine.html

https://www.law.com/newyorklawjournal/2018/09/18/seaworld-ex-ceo-reach-5m-settlement-with-sec-for-misleading-investors-over-blackfish-effect/?slreturn=20180829182942

https://www.huffingtonpost.com/caty-borum-chattoo/anatomy-of-the-blackfish-_b_9511932.html

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