$5.2 Million Settlement for Inside Trader
CHICAGO (CN) - A man in Bangkok will pay $5.2 million to settle charges he traded on inside information about a Chinese company's buyout of Smithfield Foods, a leading U.S. ham producer, the SEC said.
The SEC froze the assets of Badin Rungruangnavarat on June 5. He works at a plastics company in Bangkok, and apparently is not a stock broker, according to the SEC complaint, filed under seal on June 5.
Rungruangnavarat, 30, maintained a U.S. brokerage account and tried to transfer $3 million from it overseas after his inside-trading gains, the SEC said in its June 5 request for a freeze.
"The defendant's well-timed trades yielded unrealized gains of more than $3.2 million. He reaped a return on investment of more than 3,400 percent in a span of eight days," she SEC said in its original complaint.
Smithfield Foods announced on May 29 that Shuanghui was buying it for $4.7 billion - the largest corporate acquisition ever of a U.S. company by a Chinese one.
"In the days leading up to the acquisition announcement, defendant purchased such a large amount of Smithfield call options and single-stock futures contracts that he essentially cornered the market in those securities," the SEC said in its June 5 lawsuit. "Following the announcement, Smithfield stock opened at $32.39, an increase of $6.42 (or 24.7 percent) from its previous day's close."
A federal judge in Chicago approved the settlement on Thursday, the SEC said in a statement. It said that Rungruangnavarat's source may have been "a Facebook friend who was an associate director at the investment bank for a different company that was considering a Smithfield acquisition."
Rungruangnavarat agreed to disgorge the $3.2 million he made and pay a $2 million penalty, the SEC said. As is customary with the SEC, he did not have to admit he did anything wrong.