The US Securities and Exchange Commission is looking into whether a trader based in Thailand illegally made money off the $4.7 billion sale of US pork products company Smithfield Foods to China’s Shuanghui International. The SEC froze the assets of Badin Rungruangnavarat, who is accused of making more than $3 million through insider trading related to the deal announced last week. It’s one more sign of the SEC’s recent obsession with insider trading cases.
The SEC accuses Rungruangnavarat of getting pre-announcement information about the deal through a Facebook friend, who works at an investment bank that was advising another company interested in acquiring Smithfield. Charoen Pokphand Foods of Thailand and JBS SA of Brazil were also considering a deal for Smithfield. The Thai trader allegedly made a 3,400% return on his investment.
In another example, the SEC pounced on the $23 billion sale of Heinz to Brazilian investment firm 3G Capital and Warren Buffett’s Berkshire Hathaway. The day after that deal was announced in February, the SEC sought to freeze the assets in a Switzerland-based trading account used to make $1.7 million off of the deal.
Normally, it takes the SEC more time to investigate and build a case before it takes any action. But the agency has made insider trading cases a priority, so they have become more sophisticated and nimble in tracking them down. (That said, in the Smithfield case, it wouldn’t have been difficult to track down intel on the Thai trader if the information came through Facebook.)
The SEC has also been targeting foreigners, usually related to insider trading in cross-border deals. In March, the SEC reached a $3.3 million settlement with a Chinese couple who were accused of insider trading related to the sale of Canada’s Nexen to Chinese oil company CNOOC. Last November, a Brazilian ex-banker agreed to pay $5.1 million to settle an insider trading case related to the $4 billion sale of Burger King to 3G Capital. Igor Cornelsen sent emails ahead of that deal’s announcement, asking ”Is the sandwich deal going to happen?”
The traders suspected in the Heinz deal remain anonymous. It’s unclear whether they are foreigners, but they may be based in Switzerland.