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 sum 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, who it said placed the trades in an account of the entity, Somerton Resources Limited, and made trades in his own brokerage account.
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 was a director of the company’s banking unit. Both men were Chilean citizens living in Santiago, the lawsuit said.
The SEC subsequently obtained a court order freezing $42.8 million of Bilbao’s and Somerton’s assets.
Lawyers for Bilbao and Hurtado did not respond to requests for comment.
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)