SEC v. FREDERICK D. JACOBS, No. 1:18-cv-08482, Southern District of New York (Jan. 13, 2014) — Complaint

STEPHEN C. MCKENNA
(Pro Hac Vice Application pending)
[email protected]
SECURITIES AND EXCHANGE COMMISSION
1961 Stout Street, 17th Floor
Denver, Colorado 80294
(303) 844-1000

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

UNITED STATES SECURITIES AND EXCHANGE
COMMISSION,

Plaintiff,

- against -

FREDERICK D. JACOBS,

Defendant.

1:18-cv-_____-________

COMPLAINT AND JURY
DEMAND

ECF CASE

Plaintiff, United States Securities and Exchange Commission (the “SEC”), for its
Complaint against defendant Frederick D. Jacobs (“Jacobs” or “Defendant”), alleges as follows:
SUMMARY
1. This Complaint concerns an untrue or misleading statement made by Jacobs,
SeaWorld Entertainment, Inc.’s (“SeaWorld”) then-vice president of communications, relating to
the impact of the documentary film Blackfish on the company’s reputation and/or business (i.e.,
“Blackfish effect”).  Blackfish was highly critical of SeaWorld’s treatment of its orcas (killer
whales).  The film was released in theaters in July 2013, and received significant media attention
that escalated as the film became more widely distributed—including via multiple airings on
cable television beginning in late October 2013.

2

2. Jacobs—just prior to selling his SeaWorld stock—made an untrue statement of
material fact and/or omitted material facts from his statement that were necessary in order to
make the statement he made not misleading to investors about the Blackfish effect.  In particular,
in an article published on January 13, 2014, Jacobs provided a quote stating: “[T]here is no truth
to the suggestion that SeaWorld’s reputation or business has been harmed by Blackfish.”
NATURE OF THE PROCEEDINGS AND REQUESTED RELIEF
3. The SEC seeks a permanent injunction against Defendant enjoining him from
engaging in the transactions, acts, practices, and courses of business alleged in this Complaint
and from violating, directly or indirectly, the laws alleged in this Complaint; and disgorgement
of all ill-gotten gains from the unlawful activity set forth in this Complaint, together with
prejudgment interest.
JURISDICTION AND VENUE
4. This Court has jurisdiction over this action pursuant to Section 22(a) of the
Securities Act [15 U.S.C. § 77v(a)].
5. Venue lies in this Court pursuant to Section 22(a) of the Securities Act [15 U.S.C.
§ 77v(a)].  Certain of the acts, practices, transactions, and courses of business alleged in this
Complaint occurred within the Southern District of New York and were affected, directly or
indirectly, by making use of means or instrumentalities of transportation or communication in
interstate commerce, or the mails, or the facilities of a national securities exchange.  SeaWorld’s
stock is traded on the New York Stock Exchange (“NYSE”), which is located in the Southern
District of New York.

3

DEFENDANT
6. Frederick D. Jacobs:  Jacobs is a resident of Philadelphia, Pennsylvania.  During
the time period relevant to this Complaint, Jacobs was SeaWorld’s vice-president of
communications.  In this role, Jacobs was responsible for responding to inquiries from the media
on behalf of SeaWorld.
FACTS
Jacobs Should Have Known that the Blackfish Effect Was Material to Investors

7. Even before Blackfish was released in theatres in July 2013, SeaWorld’s top
management was concerned about the film’s potential impact to SeaWorld’s business.  Some
investors also expressed concern about the film’s potential impact to SeaWorld’s business prior
to the film’s release.
8. In August 2013, soon after Blackfish’s theatrical release, SeaWorld reported that
attendance in the second quarter dropped from the prior year.  At that time, the Company had not
done a specific assessment of whether a portion of that drop was related to Blackfish.  The
financial press inquired whether Blackfish was harming attendance.  In response, SeaWorld told
the press that it could “attribute no attendance impact at all to the movie.”
9. On August 28, 2013, an article in the financial press suggested that, despite
SeaWorld’s denial, there might have been a link between Blackfish and SeaWorld’s declining
attendance.  Immediately following the article, SeaWorld’s share price dropped by five percent
(5%).  Jacobs should have known that the Blackfish effect, if and when such occurred, would be
material to investors.

4

In Fall 2013, SeaWorld Measured Harm to Its Reputation
10. Prior to and throughout the Relevant Period, SeaWorld regularly described its
reputation in SEC filings as one of its “most important assets,” and linked public perception of
the company to the possibility of reduced attendance and a negative impact on the company’s
business and results of operations.
11. In September 2013, SeaWorld received the results of its annual corporate
reputation study, which was conducted from August 22–30, 2013.
12. The results showed that SeaWorld’s reputation score had fallen by 12.8% on a
year-over-year basis and was the lowest score SeaWorld had measured since beginning the
annual study in 2010.
13. The study also showed that, among those who were aware of Blackfish, 32% had
less favorable opinions of SeaWorld as a result (vs. 11% who had more favorable opinions), and
that even some people who had not heard of Blackfish by name were aware of the film’s anti-
captivity message and might be impacted by it.
14. The corporate reputation study was presented by the communications department
staff, including Jacobs, to SeaWorld’s strategy committee, which included SeaWorld’s CEO, on
October 17, 2013.  Following the study, some SeaWorld officers and employees, including
Jacobs, believed that Blackfish had harmed SeaWorld’s reputation.
In Late 2013, the Blackfish Effect Was Becoming More Pronounced

15. In late November and early December 2013, following the first television
broadcasts of Blackfish, a number of high-profile musical acts cancelled their performances at

5

SeaWorld and tied the cancellations to Blackfish.  As Jacobs put it in an email, SeaWorld’s
reputation at that point was “positively radioactive.”
16. By mid-December 2013, SeaWorld had also been informed that a number of
nationally known promotional partners wished to withdraw from or delay marketing
arrangements due to their fear of a public backlash associated with Blackfish.  Even SeaWorld’s
“longest running Partner (25 years)” declined to participate in SeaWorld’s 50th anniversary tour
because of Blackfish.
17. Although SeaWorld at that time was experiencing year-over-year revenue growth
and only modest declines in attendance, these cancellations should have provided confirmation
that SeaWorld’s reputation had been materially damaged by Blackfish, and that the Blackfish
effect was negatively affecting SeaWorld’s business relationships.
18. In an article published on January 13, 2014, Jacobs provided a quote stating:
“[T]here is no truth to the suggestion that SeaWorld’s reputation or business has been harmed by
Blackfish.”  In light of the reputational damage SeaWorld had measured and ensuing fallout with
sponsors and bands that was linked to Blackfish, Jacobs should have known that this statement
was untrue and/or that it contained omissions of material facts that were necessary to make the
statement not misleading.
19. Over a period of four weeks following the January 13, 2014 article, Jacobs sold
SeaWorld stock.  SeaWorld’s stock price was inflated as a result of the conduct alleged in this
Complaint, allowing Jacobs to avoid losses of approximately $84,885 on his sales.

6

SeaWorld’s Disclosure on August 13, 2014
20. On August 13, 2014, SeaWorld, for the first time a cknowledging that negative
publicity connected with Blackfish was impacting attendance, stated in a Form 8-K filing that
attendance in Q2 2014 “was impacted by demand pressures related to recent media attention
surrounding proposed legislation in the state of California.”  Although the disclosure did not
refer to Blackfish by name, it was understood internally, and by the press, analysts, and investors,
that SeaWorld had finally disclosed that Blackfish was negatively affecting its business and that
the Blackfish effect—even if not quantifiably material on a companywide basis at that point—
was qualitatively material to investors.
21. Following the Form 8-K filing, in which the company also included a downward
revision of its earnings guidance for the year, SeaWorld’s stock price fell from $28.15 to
$18.90—a 33% drop—thereby decreasing SeaWorld’s market capitalization by approximately
$830 million.  The announcement also widely caused analysts to downgrade SeaWorld’s stock to
a sell recommendation.
FIRST CLAIM FOR RELIEF
Section 17(a)(2) of the Securities Act
[15 U.S.C. Sec. 77q(a)(2)]

22. The SEC realleges and incorporates by reference paragraphs 1 through 22, as
though fully set forth herein.
23. By virtue of the foregoing, Jacobs, directly or indirectly, in the offer or sale of
securities, by use of the means or instruments of transportation or communication in interstate
commerce or by use of the mails, acting negligently, obtained money or property by means of an

7

untrue statement of material fact or omission to state a material fact necessary in order to make
the statements made, in light of the circumstances under which they were made, not misleading.
24. By virtue of the foregoing, Jacobs, directly or indirectly, violated and, unless
restrained and enjoined, will again violate Section 17(a)(2) of the Securities Act.
RELIEF SOUGHT
WHEREFORE, the SEC respectfully requests that this Court:
I.
Find that the Defendant committed the violation alleged in this Complaint;
II.
Enter an Injunction, in a form consistent with Rule 65(d) of the Federal Rules of Civil
Procedure, permanently restraining and enjoining the Defendant from engaging in the
transactions, acts, practices, and courses of business alleged in this Complaint and from
violating, directly or indirectly, the laws alleged in this Complaint;
III.
Order that the Defendant disgorge any and all ill-gotten gains, together with pre-
judgment interest, derived from the improper conduct set forth in this Complaint;
IV.
Retain jurisdiction over this action to implement and carry out the terms of all orders and
decrees that may be entered; and
V.
Grant such other relief as this Court may deem just or appropriate.

8

JURY DEMAND
The SEC demands a trial by jury on all claims so triable.

Respectfully submitted this 18
th
 day of September, 2018.

      /s/ Stephen C. McKenna
Stephen C. McKenna
(Pro Hac Vice Application pending)
Attorney for Plaintiff
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
1961 Stout Street, 17th Floor
Denver, Colorado 80294
(303) 844-1000
[email protected]

STEPHEN C. MCKENNA 
(Pro Hac Vice Application pending) 
[email protected] 
SECURITIES AND EXCHANGE COMMISSION 
1961 Stout Street, 17th Floor 
Denver, Colorado 80294 
(303) 844-1000 
 

UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF NEW YORK 

 
 
UNITED STATES SECURITIES AND EXCHANGE 
COMMISSION, 
 

Plaintiff, 
 

- against - 
 
FREDERICK D. JACOBS, 
 

Defendant. 
 

 
1:18-cv-_____-________ 

 
COMPLAINT AND JURY 

DEMAND 
 

ECF CASE 

 

Plaintiff, United States Securities and Exchange Commission (the “SEC”), for its 

Complaint against defendant Frederick D. Jacobs (“Jacobs” or “Defendant”), alleges as follows: 

SUMMARY 

1. This Complaint concerns an untrue or misleading statement made by Jacobs, 

SeaWorld Entertainment, Inc.’s (“SeaWorld”) then-vice president of communications, relating to 

the impact of the documentary film Blackfish on the company’s reputation and/or business (i.e., 

“Blackfish effect”).  Blackfish was highly critical of SeaWorld’s treatment of its orcas (killer 

whales).  The film was released in theaters in July 2013, and received significant media attention 

that escalated as the film became more widely distributed—including via multiple airings on 

cable television beginning in late October 2013. 

Case 1:18-cv-08482   Document 1   Filed 09/18/18   Page 1 of 8



2 
 

2. Jacobs—just prior to selling his SeaWorld stock—made an untrue statement of 

material fact and/or omitted material facts from his statement that were necessary in order to 

make the statement he made not misleading to investors about the Blackfish effect.  In particular, 

in an article published on January 13, 2014, Jacobs provided a quote stating: “[T]here is no truth 

to the suggestion that SeaWorld’s reputation or business has been harmed by Blackfish.”   

NATURE OF THE PROCEEDINGS AND REQUESTED RELIEF 

3. The SEC seeks a permanent injunction against Defendant enjoining him from 

engaging in the transactions, acts, practices, and courses of business alleged in this Complaint 

and from violating, directly or indirectly, the laws alleged in this Complaint; and disgorgement 

of all ill-gotten gains from the unlawful activity set forth in this Complaint, together with 

prejudgment interest. 

JURISDICTION AND VENUE 

4. This Court has jurisdiction over this action pursuant to Section 22(a) of the 

Securities Act [15 U.S.C. § 77v(a)]. 

5. Venue lies in this Court pursuant to Section 22(a) of the Securities Act [15 U.S.C. 

§ 77v(a)].  Certain of the acts, practices, transactions, and courses of business alleged in this 

Complaint occurred within the Southern District of New York and were affected, directly or 

indirectly, by making use of means or instrumentalities of transportation or communication in 

interstate commerce, or the mails, or the facilities of a national securities exchange.  SeaWorld’s 

stock is traded on the New York Stock Exchange (“NYSE”), which is located in the Southern 

District of New York.   

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3 
 

DEFENDANT 

6. Frederick D. Jacobs:  Jacobs is a resident of Philadelphia, Pennsylvania.  During 

the time period relevant to this Complaint, Jacobs was SeaWorld’s vice-president of 

communications.  In this role, Jacobs was responsible for responding to inquiries from the media 

on behalf of SeaWorld.  

FACTS 

Jacobs Should Have Known that the Blackfish Effect Was Material to Investors 
 

7. Even before Blackfish was released in theatres in July 2013, SeaWorld’s top 

management was concerned about the film’s potential impact to SeaWorld’s business.  Some 

investors also expressed concern about the film’s potential impact to SeaWorld’s business prior 

to the film’s release. 

8. In August 2013, soon after Blackfish’s theatrical release, SeaWorld reported that 

attendance in the second quarter dropped from the prior year.  At that time, the Company had not 

done a specific assessment of whether a portion of that drop was related to Blackfish.  The 

financial press inquired whether Blackfish was harming attendance.  In response, SeaWorld told 

the press that it could “attribute no attendance impact at all to the movie.”   

9. On August 28, 2013, an article in the financial press suggested that, despite 

SeaWorld’s denial, there might have been a link between Blackfish and SeaWorld’s declining 

attendance.  Immediately following the article, SeaWorld’s share price dropped by five percent 

(5%).  Jacobs should have known that the Blackfish effect, if and when such occurred, would be 

material to investors. 

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4 
 

In Fall 2013, SeaWorld Measured Harm to Its Reputation 

10. Prior to and throughout the Relevant Period, SeaWorld regularly described its 

reputation in SEC filings as one of its “most important assets,” and linked public perception of 

the company to the possibility of reduced attendance and a negative impact on the company’s 

business and results of operations.  

11. In September 2013, SeaWorld received the results of its annual corporate 

reputation study, which was conducted from August 22–30, 2013.   

12. The results showed that SeaWorld’s reputation score had fallen by 12.8% on a 

year-over-year basis and was the lowest score SeaWorld had measured since beginning the 

annual study in 2010.   

13. The study also showed that, among those who were aware of Blackfish, 32% had 

less favorable opinions of SeaWorld as a result (vs. 11% who had more favorable opinions), and 

that even some people who had not heard of Blackfish by name were aware of the film’s anti-

captivity message and might be impacted by it.   

14. The corporate reputation study was presented by the communications department 

staff, including Jacobs, to SeaWorld’s strategy committee, which included SeaWorld’s CEO, on 

October 17, 2013.  Following the study, some SeaWorld officers and employees, including 

Jacobs, believed that Blackfish had harmed SeaWorld’s reputation. 

In Late 2013, the Blackfish Effect Was Becoming More Pronounced 
 

15. In late November and early December 2013, following the first television 

broadcasts of Blackfish, a number of high-profile musical acts cancelled their performances at 

Case 1:18-cv-08482   Document 1   Filed 09/18/18   Page 4 of 8



5 
 

SeaWorld and tied the cancellations to Blackfish.  As Jacobs put it in an email, SeaWorld’s 

reputation at that point was “positively radioactive.” 

16. By mid-December 2013, SeaWorld had also been informed that a number of 

nationally known promotional partners wished to withdraw from or delay marketing 

arrangements due to their fear of a public backlash associated with Blackfish.  Even SeaWorld’s 

“longest running Partner (25 years)” declined to participate in SeaWorld’s 50th anniversary tour 

because of Blackfish.   

17. Although SeaWorld at that time was experiencing year-over-year revenue growth 

and only modest declines in attendance, these cancellations should have provided confirmation 

that SeaWorld’s reputation had been materially damaged by Blackfish, and that the Blackfish 

effect was negatively affecting SeaWorld’s business relationships.   

18. In an article published on January 13, 2014, Jacobs provided a quote stating: 

“[T]here is no truth to the suggestion that SeaWorld’s reputation or business has been harmed by 

Blackfish.”  In light of the reputational damage SeaWorld had measured and ensuing fallout with 

sponsors and bands that was linked to Blackfish, Jacobs should have known that this statement 

was untrue and/or that it contained omissions of material facts that were necessary to make the 

statement not misleading.    

19. Over a period of four weeks following the January 13, 2014 article, Jacobs sold 

SeaWorld stock.  SeaWorld’s stock price was inflated as a result of the conduct alleged in this 

Complaint, allowing Jacobs to avoid losses of approximately $84,885 on his sales. 

Case 1:18-cv-08482   Document 1   Filed 09/18/18   Page 5 of 8



6 
 

SeaWorld’s Disclosure on August 13, 2014 

20. On August 13, 2014, SeaWorld, for the first time acknowledging that negative 

publicity connected with Blackfish was impacting attendance, stated in a Form 8-K filing that 

attendance in Q2 2014 “was impacted by demand pressures related to recent media attention 

surrounding proposed legislation in the state of California.”  Although the disclosure did not 

refer to Blackfish by name, it was understood internally, and by the press, analysts, and investors, 

that SeaWorld had finally disclosed that Blackfish was negatively affecting its business and that 

the Blackfish effect—even if not quantifiably material on a companywide basis at that point—

was qualitatively material to investors. 

21. Following the Form 8-K filing, in which the company also included a downward 

revision of its earnings guidance for the year, SeaWorld’s stock price fell from $28.15 to 

$18.90—a 33% drop—thereby decreasing SeaWorld’s market capitalization by approximately 

$830 million.  The announcement also widely caused analysts to downgrade SeaWorld’s stock to 

a sell recommendation. 

FIRST CLAIM FOR RELIEF 

Section 17(a)(2) of the Securities Act  
[15 U.S.C. Sec. 77q(a)(2)] 

 
22. The SEC realleges and incorporates by reference paragraphs 1 through 22, as 

though fully set forth herein. 

23. By virtue of the foregoing, Jacobs, directly or indirectly, in the offer or sale of 

securities, by use of the means or instruments of transportation or communication in interstate 

commerce or by use of the mails, acting negligently, obtained money or property by means of an 

Case 1:18-cv-08482   Document 1   Filed 09/18/18   Page 6 of 8



7 
 

untrue statement of material fact or omission to state a material fact necessary in order to make 

the statements made, in light of the circumstances under which they were made, not misleading. 

24. By virtue of the foregoing, Jacobs, directly or indirectly, violated and, unless 

restrained and enjoined, will again violate Section 17(a)(2) of the Securities Act. 

RELIEF SOUGHT 

WHEREFORE, the SEC respectfully requests that this Court: 

I. 

Find that the Defendant committed the violation alleged in this Complaint;  

II. 

Enter an Injunction, in a form consistent with Rule 65(d) of the Federal Rules of Civil 

Procedure, permanently restraining and enjoining the Defendant from engaging in the 

transactions, acts, practices, and courses of business alleged in this Complaint and from 

violating, directly or indirectly, the laws alleged in this Complaint;  

III. 

Order that the Defendant disgorge any and all ill-gotten gains, together with pre-

judgment interest, derived from the improper conduct set forth in this Complaint;  

IV. 

Retain jurisdiction over this action to implement and carry out the terms of all orders and 

decrees that may be entered; and 

V. 

Grant such other relief as this Court may deem just or appropriate.   

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8 
 

JURY DEMAND 

The SEC demands a trial by jury on all claims so triable. 

 
 
Respectfully submitted this 18th day of September, 2018. 
 
 
 

      /s/ Stephen C. McKenna     
Stephen C. McKenna  
(Pro Hac Vice Application pending) 
Attorney for Plaintiff 
UNITED STATES SECURITIES AND 
EXCHANGE COMMISSION 
1961 Stout Street, 17th Floor 
Denver, Colorado 80294 
(303) 844-1000 
[email protected] 

 

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