(Adds comments from defense lawyers)
By Nate Raymond
NEW YORK, Oct 23 (Reuters) - A former board member of Chile's CFR Pharmaceuticals SA has reached a $13.2 million settlement to resolve charges by a U.S. regulator that he engaged in insider trading ahead of Abbott Laboratories' $2.9 billion acquisition of the drug company.
The U.S. Securities and Exchange Commission, in papers filed on Friday in Manhattan federal court, said the settlement would be paid by a British Virgin Islands entity through which Juan Cruz Bilbao Hormaeche of Chile conducted the alleged insider trading.
The SEC also agreed to drop charges against a business associate of Bilbao, Tomas Andres Hurtado Rourke. The SEC had said Hurtado placed the trades on Bilbao's behalf in an account of the British Virgin Islands entity, Somerton Resources Limited. He also personally made trades in his own brokerage account, the agency said.
The trading took place after Bilbao participated in a March 2014 meeting via telephone in which CFR's board considered a confidential proposal by Abbott to buy the company.
The announcement by Abbott days later of an agreement to buy CFR in a $2.9 billion deal enabled Bilbao and Hurtado to reap about $10.6 million in illicit profits, the SEC said.
The SEC filed its lawsuit in December against Bilbao, the president of banking and insurance company Consorcio Financiero SA, and Hurtado, who like Bilbao is a Chilean citizen living in Santiago.
The SEC subsequently obtained a court order freezing $42.8 million of Bilbao's and Somerton's assets.
Lawrence Spiegel, a lawyer for Bilbao at Skadden, Arps, Slate, Meagher & Flom, said his client was "seeking to put this matter behind him," adding he was thankful for the support he received from family and friends "during this challenging time."
Hurtado's lawyers - Lewis Liman at Cleary Gottlieb Steen & Hamilton, and Chilean local law firm Claro & Cia - said the SEC's decision to dismiss charges against him reflected its conclusion the evidence did not support the claims he faces.
"Mr. Hurtado never acted improperly, nor committed any violation," Hurtado's lawyers said.
The case is U.S. Securities and Exchange Commission v. Bilbao et al., U.S. District Court, Southern District of New York, No. 14-cv-10036. (Reporting by Nate Raymond in New York; Editing by Tom Brown and Christian Plumb)