A former board member of Chile's CFR Pharmaceuticals SA was charged Monday by U.S. regulators with insider trading on information regarding Abbott Laboratories' $2.9 billion acquisition of CFR earlier this year.
The U.S. Securities and Exchange Commission filed a civil lawsuit accusing Juan Cruz Bilbao Hormaeche of reaping more than $10.1 million of profit by trading on key non-public information he learned from CFR board meetings ahead of the deal, which was announced in May and finalized in September.
The lawsuit also charged a business associate of Bilbao, Tomas Andres Hurtado Rourke, with processing securities transactions for Bilbao and himself through an offshore entity. Rourke earned nearly $500,000 in profits, according to the SEC.
Bilbao, 55, and Hurtado, 40, are Chilean citizens who live in Santiago, according to the lawsuit. Lawyers for the two men could not immediately be identified.
Bilbao is the president of banking and insurance company Consorcio Financiero SA, and Hurtado is a director of the company's banking unit, according to Consorcio's website.
Representatives at Consorcio were not immediately available to comment.
According to the SEC, Bilbao first learned of Abbott's confidential offer to acquire CFR at a board meeting March 10.
Between March 12 and May 7, Bilbao used Hurtado to purchase more than 700,000 American depositary shares of CFR for a total of $14.35 million in the name of a British Virgin Islands entity, Somerton Resources Limited, the lawsuit said.
Hurtado also bought $700,000 of CFR shares, it said.
Bilbao and Hurtado tendered their shares after CFR's stock price rose following Abbott's announcement of the acquisition, the SEC said.
The SEC is seeking an order freezing Bilbao, Hurtado and Somerton's assets and requiring them to be repatriated.
Spokespeople for Abbott did not immediately respond to a request for comment.
The case is U.S. Securities and Exchange Commission v. Bilbao et al., U.S. District Court for the Southern District of New York, No. 14-cv-10036.
