A Bangkok-based trader has agreed to pay $5.2 million to settle accusations that he traded on insider information tied to Smithfield Foods’ proposed $4.7 billion sale to a Chinese food processor, the Securities and Exchange Commission announced on Thursday.
The settlement comes three months after the S.E.C. froze the assets of Badin Rungruangnavarat, a 30-year-old employee of a Thai plastics company, accusing him of making $3.2 million in illicit profits from the trading. His return was calculated at more than 3,400 percent.
Under the terms of the settlement, Mr. Badin agreed to forfeit his gains and to pay $2 million in penalties. He neither admitted nor denied the S.E.C.’s allegations but agreed to a permanent bar from violating American securities laws.
“Our quick action in June to stop Badin’s insider trading profits from leaving the U.S. made this multimillion-dollar settlement possible,†Daniel M. Hawke, the chief of the S.E.C.’s market abuse unit, said in a statement. “Once he was denied access to his trading account, Badin elected to forfeit all of his ill-gotten proceeds plus pay a $2 million penalty to settle the case against him.â€
According to an S.E.C. lawsuit filed in June, Mr. Badin bought 3,000 out-of-the-money call options tied to Smithfield’s stock in May, when little trading in the securities was taking place. Between the options, single-stock futures and common shares that he purchased, Mr. Badin paid $95,450.84 and posted $1.3 million in margin.
Toward the end of the month, Smithfield announced a deal to sell itself to Shuanghui International of China at a price of $34 a share.
Behind the S.E.C.’s actions was the agency’s belief that Mr. Badin was tipped off to a potential sale of Smithfield. The regulator noted in its complaint that one of the defendant’s Facebook friends is an employee of a Thai investment bank that was advising Charoen Pokphand Foods, a large food conglomerate that had held discussions with Smithfield.
