A former Banco Santander SA (SAN) official and an ex-judge in Spain were sued by U.S. regulators over claims they used inside information to make illegal trades ahead of BHP Billiton Ltd.’s $39 billion takeover bid for Potash Corp. of Saskatchewan Inc.
Cedric Canas Maillard, who was an executive adviser to Banco Santander’s chief executive officer, and his friend Julio Marin Ugedo, reaped illicit profits of nearly $1 million, the Securities and Exchange Commission said in a lawsuit filed today in federal court in Manhattan. They made the trades after Canas learned that Spain’s biggest bank had been asked to advise BHP Billiton, the world’s largest mining company, on the deal.
The SEC’s lawsuit is the latest action related to a continuing investigation into suspicious trading ahead of the Aug. 17, 2010, public announcement of BHP’s acquisition bid. A former Banco Santander employee agreed to pay $625,000 to settle similar insider trading claims in 2011.
In the days leading up to the announcement, Canas purchased the equivalent of 30,000 shares of U.S.-listed Potash through highly leveraged securities called contracts-for-difference, or CFDs, the SEC said.
“To those who think they can mask their insider trading by trading CFDs rather than the underlying equity security, this case demonstrates our resolve to detect such trading and hold them accountable for violating the federal securities laws,” Daniel Hawke, chief of the SEC market abuse unit, said in a statement.
According to the SEC, there is no known defense counsel for Canas and Marin.
Potash shares jumped 28 percent on the day the Saskatoon, Saskatchewan-based company said it had rejected the offer from BHP. Melbourne-based BHP took its $130-a-share cash offer directly to Potash investors before dropping the bid amid regulatory opposition.
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