October 31, 2019

SEC settles insider trading allegations

On October 29, 2019, the US District Court for the Northern District of Illinois issued a final consent judgment approving settlement of SEC insider trading charges against Bovorn Rungruangnavarat.  In a complaint filed in May 2018, the SEC alleged that Rungruangnavarat coordinated with his brother to trade on inside information learned from a close friend, in advance of the public announcement regarding the acquisition of Smithfield Foods, Inc. by Shuanghui International Holdings in May 2013.  The brothers’ friend worked an investment bank, and, based on the information he provided, the two brothers purchased 75,000 shares of Smithfield stock, 3,000 Smithfield call options, and 2,580 Smithfield futures contracts.  When the proposed $4.7 billion acquisition was announced on May 29, 2013, it was the largest potential takeover of a US company by a Chinese buyer, and, according to the complaint, the Rungruangnavarat brothers profited $3.8 million when the value of their Smithfield holdings rose in reaction to the announcement.

Pursuant to the settlement, Rungruangnavarat has consented to entry of judgment and an injunction, and will be required to pay disgorgement of $274,339.

Bovorn’s brother, Badin Rungruangnavarat, had previously settled similar SEC claims, agreeing to pay a civil penalty of $2 million, and disgorgement of $3.2 million.

SEC Litigation Release | Judgment | Complaint