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Heinz insider trading case settled for $5 mn

Bottles of Heinz ketchup are displayed on a shelf on February 14, 2013 in San Francisco, California
Bottles of Heinz ketchup are displayed on a shelf on February 14, 2013 in San Francisco, California

Two Brazilian brothers will pay $5 million to settle insider trading charges related to trades ahead of the February 2013 acquisition of Heinz, the US Securities and Exchange Commission announced Thursday.

Rodrigo and Michel Terpins agreed to the settlement over their purchase of option positions in Heinz the day before the February 14 announcement that the company would be bought by Berkshire Hathaway and 3G Capital in a $28 billion deal. The investments netted the brothers $1.8 million, the SEC said.

3G has offices in New York and Rio de Janeiro.

Rodrigo Terpins ordered the trade after speaking with his brother Michel, who had learned that an investment consortium which included 3G was about to announce a major acquisition and that the target was Heinz. Heinz is best known for its ketchup.

The day after the Heinz deal was announced, the SEC obtained an emergency court order freezing a Swiss brokerage account that executed the trades. The SEC did not know the identity of the account-holders at the time.

The Swiss account belonged to a Cayman Island-based entity named Alpine Swift.

The Terpins must pay back the $1.8 million in ill-gotten gains plus a $3 million penalty.

"Those who use foreign accounts to commit insider trading in the US markets should know their activities can still be tracked and they will be held accountable by the SEC for their actions," said Sanjay Wadhwa, senior associate director for enforcement for the SEC's New York office.

The SEC said its investigation into the matter is continuing.

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