MANHATTAN (CN) – The managing director of a financial advisory services firm tipped a friend to inside information that the Albertson’s supermarket chain would be sold, and the friend and his cohorts made $3.6 million by trading on the illegal tip, the SEC claims in Federal Court. It sued Ramesh Chakrapani, managing director for corporate and mergers and acquisitions in the unnamed firm.
Albertson’s hired Chakrapani’s firm in July 2005 to solicit purchasers, the SEC says. Private equity investors and Supervalu made two offers to acquire Albertson’s, in late 2005 and early 2006. The second offer, for $26.29 per share, was accepted while Albertson’s stock was trading at $24.11, the SEC claims.
Chakrapani allegedly had tipped his pals, who made a flurry of purchases before the public announcement and sold them shortly thereafter, reaping $3.6 million from it, the complaint states.
The SEC seeks disgorgement, penalties and an injunction. Chakrapani, 33, a U.S. citizen, worked in the unnamed firm’s New York office from 2001 to 2008, before transferring to its office in London, where he lives now, the SEC says.