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SEC Files Insider Trading Charges in connection with Smithfield Foods Acquisition

The Securities and Exchange Commission continued its efforts to crack-down on illegal insider trading this week as it announced charges against a foreign citizen who, in conjunction with his brother, is alleged to have profited by trading prior to the May 2013 public announcement of WH Group’s acquisition of Smithfield Foods.

In its complaint, the SEC alleges that in early May 2013 trader Bovorn Rungruangnavarat coordinated with his brother, Badin, to purchase significant volumes of call options, futures and Smithfield shares after being tipped by an investment banker friend of the potential acquisition.  After the acquisition’s public announcement, the brothers liquidated their positions pocketing $3.8 million.

The SEC had previously charged the brother, Badin, with insider trading in June 2013. Without admitting or denying those SEC’s charges, Badin settled and agreed to return ill-gotten gains of $3.2 million trading gains (disgorgement) and to pay a $2 million civil penalty. ​

In its recent complaint against Bovorn, the SEC has sought all the typical remedies in an insider trading case: disgorgement (in this case $560,000 in profits), along with injunctive relief, prejudgment interest and civil penalties.​

What is interesting about this case is how long it took the SEC (almost 5 years) to come around to sue the brother.  After five years, the SEC would have been out of luck, as the recent United States Supreme Court’s Kokesh decision cuts-off the SEC’s right to seek disgorgement after five years from the date of the illegal conduct.   The same is true (a 5 year statute of limitations period) for the SEC ‘s right to impose a civil penalty as set forth in the Gabelli decision.

If you have received an SEC Subpoena for possible insider trading, it is critical that you immediately protect your legal interests by retaining an experienced SEC defense lawyer.  David R. Chase formerly worked for the SEC in its Enforcement Division as a Senior Counsel and understands how the SEC investigates, prosecutes and settles its cases.

The Law Firm of David R. Chase, an SEC law firm located in South Florida, is headed by SEC defense lawyer David Chase, who represents those under SEC investigations around the country.  You may contact SEC defense lawyer Mr. Chase toll-free at: 800-760-0912 for a confidential and no cost initial consultation, or at david@davidchaselaw.com.