WASHINGTON – The Securities and Exchange Commission (SEC) is seeking a jury trial in the case of Bovorn Rungruangnavarat who is accused of using insider information to profit from Shuanghui’s (now known as WH Group Ltd.) acquisition of Smithfield Foods in 2013.
Bovorn Rungruangnavarat, a resident of Bangkok, Thailand, is the founder, CEO, and managing director of Nizza Plastics Company Limited manufactures PVC Rigid Film that serves various industrial companies, including food packaging businesses, according to court documents.
Court documents state that between May 6, 2013 and May 28, 2013, Bovorn and his brother, Badin Rungruangnavarat, bought 75,000 shares of Smithfield stock, 3,000 Smithfield call options, and 2,580 Smithfield futures contracts based on the inside information that Bovorn learned from a close friend who worked at Thai Investment Bank.
The brothers made approximately $3.8 million following the announcement of the Smithfield acquisition for $4.7 billion which was the largest proposed takeover of a United States company by a Chinese buyer at that time. Under the terms of the deal Shuanghui agreed to pay $34 per share, or a 31 percent premium over Smithfield’s closing price of $25.97 per share. The price of Smithfield Foods stock jumped sharply opening at $32.39 per share and closing at $33.35 per share on May 29, 2013.
The SEC sued Badin for insider trading in Smithfield securities on June 5, 2013. Court documents state that “…In the original action, the SEC identified a single brokerage account that accounted for many but not all of the illicit trades noted in paragraph 3 above. The SEC alleged that Badin’s well-timed trades yielded gains of approximately $3.2 million. After securing an emergency asset freeze, the SEC reached a settlement with Badin that provided for disgorgement of the then-known trading profits in the amount of $3.2 million and a $2 million civil penalty.”
The SEC now alleges that Bovorn, along with his brother Badin, used the insider information to buy the Smithfield securities as well as 74,900 Smithfield shares in four additional accounts, that the SEC did not know about at the time of the original action against Badin. The SEC also charges that Bovorn and his brother made additional profits of approximately $560,000. “In total, Bovorn and Badin generated illicit gains of approximately $3.8 million,” the SEC said in its complaint.
The SEC is seeking civil penalties and the forfeiture of “ill-gotten gains or unjust enrichment” not surrendered in the original action against Badin Rungruangnavarat.
The case is Securities And Exchange Commission v. Rungruangnavarat, case number 1:18-cv-03196, U.S. District Court for the Northern District of Illinois.