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SEC Suit Claims Insider Trading of Wimm-Bill-Dann

SEC Sues OAO Wimm-Bill-Dann Investors
OAO Wimm-Bill-Dann juice cartons sit on a supermarket shelf in Moscow. Photographer: Alexander Zemlianichenko Jr./Bloomberg

The U.S. Securities and Exchange Commission sued unidentified buyers of Wimm-Bill-Dann Foods OJSC securities over what the agency called “highly profitable and suspicious purchases” before PepsiCo Inc. announced it would buy a 66 percent stake in the Russian dairy and juice producer.

“Unknown purchasers” bought 400,000 American depositary receipts in the Russian company from Nov. 29 to Dec.1, when there was no public information available concerning the contemplated acquisition, the agency said today in a complaint in federal court in New York.

After PepsiCo’s announcement of the acquisition, the price of Wimm-Bill-Dann’s ADRs, traded on the New York Stock Exchange, increased by 28 percent, the SEC said.

“As a result, the unknown purchasers are in a position to realize total profits of approximately $2.7 million from the sale of the ADRs,” the SEC said in the complaint.

PepsiCo, based in Purchase, New York, announced Dec. 2 that it intended to acquire the interest in the company for $3.8 billion, with U.S. shares priced at $33. That was 32 percent more than the average in the preceding 30 days.

The investors bought Wimm-Bill-Dann’s U.S. shares through an account at SG Private Banking (Suisse) SA, a subsidiary of Societe Generale Bank & Trust SA, the U.S. regulators said in the complaint.

The government asked for court orders to restrain the defendants from violating U.S. law and for disgorgement of illicit profits.

The case is SEC v. One or More Unknown Purchasers, 10-cv-9159, U.S. District Court, Southern District of New York (Manhattan).

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