Ex-Sadia Executives Sentenced in Insider Trading Case

Two former executives of Sadia SA, the foodmaker that BRF Brasil Foods SA bought to form the world’s biggest poultry exporter, were sentenced and fined in the country’s first insider trading court ruling.

Former Chief Financial Officer Luiz Gonzaga Murat Jr. was sentenced to 21 months in prison and fined 349,712 reais ($210,100), Brazil’s securities regulator said today in an e- mailed statement. Romano Ancelmo Fontana Filho, a former board member, was sentenced to 17 months and fined 374,941 reais. Both can serve community service in lieu of prison.

Murat, who was Sadia’s CFO for 12 years until resigning in 2006, and Fontana were charged with illegally purchasing American depositary receipts of Perdigao SA before Sadia made a hostile bid to buy the rival in 2006. Murat and Fontana settled similar allegations of insider trading with the U.S. Securities and Exchange Commission in 2007.

Brasil Foods, formerly known as Perdigao, agreed to buy Sadia in 2009 after the rival booked more than 3 billion reais in derivative losses the year before. Brasil Foods rose to its highest ever in Sao Paulo trading today amid a news report that Billionaire investor Warren Buffett’s Berkshire Hathaway Inc. started buying shares in the company.

Brasil Foods gained 1.09 reais, or 3.8 percent, to 29.80 reais as of 10:59 a.m. New York time. Earlier, it touched 29.98 reais, the highest since the company started trading in 1997. Brazil’s benchmark Bovespa stock index rose 0.5 percent.

Murat’s lawyer, Celso Vilardi, will appeal the ruling today, he said in a phone interview from Sao Paulo. Fontana’s lawyer, Eduardo Reale, didn’t return calls to his office.

Derivatives Case

In December, Brazil’s securities regulator barred another former Sadia CFO, Adriano Ferreira, from managing public companies for three years for his role in exceeding company limits for derivatives trading in 2008. Board members were also fined 2.6 million reais as part of the same case.

Sadia fired Ferreira in September 2008. Less than two weeks later it accepted the resignations of Chairman Walter Fontana Filho and Vice Chairman Eduardo Fontana d’Avila.

To contact the reporter on this story: Lucia Kassai in Sao Paulo at lkassai@bloomberg.net.

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net.

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