Brazilian charged with Burger King insider trading

By Stephanie Ostrowski | Dec 11, 2012

WASHINGTON (Legal Newsline) - Insider trading charges have been brought against a Brazilian ex-banker for his part in a scheme to illegally trade Burger King securities.

Igor Cornelsen and his firm, Bainbridge Group, which he made trades through, allegedly gained more than $1.68 million in illegal profits by trading Burger King options based on confidential information, according to a Nov. 30 release from the Securities and Exchange Commission.

Cornelsen sought inside information from his broker Waldyr Da Silva Prado Neto before the company's September 2010 announcement that it was being acquired by a New York private equity firm. Prado was stealing the inside information from another Wells Fargo brokerage customer involved in the Burger King deal.

According to the SEC's complaint filed in federal court in Manhattan, Cornelsen became Prado's customer in 2008. On May 17, 2010, Prado sent Cornelsen an e-mail in Portuguese that translates to, "Igor, if you are around call me at the hotel. I have some info. You have to hear this."

After talking with Prado, the next day Cornelsen began trading out-of-the-money Burger King call options. Cornelsen had never previously traded Burger King securities.

Cornelsen continued trading Burger King options throughout summer of 2010 despite losing money in some cases, the SEC alleges. After another confirmation from Prado that "the sandwich deal" was going to happen, Cornelsen purchased additional Burger King call options.

In order to minimize Cornelsen's connection to Prado, he purchased the Burger King call options in accounts held at brokerage firms other than where Prado worked, according to the SEC.

To settle the SEC charges Cornelsen and Bainbridge Gourp agree to pay more than $5.1 million, subject to court approval.

The litigation continues against Prado whose assets have been frozen by the court.

After holding high-ranking positions in several banks in Brazil, Cornelsen is now retired and a resident of the Bahamas with a home in South Florida.

The SEC's complaint charges Cornelsen and Bainbridge Group with violations of Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3.

The proposed final judgment orders them to jointly and severally pay $1,681,090 in disgorgement and $136,620.96 in prejudgment interest. Cornelsen is ordered to pay a penalty of $3,362,180.

The SEC charges were neither admitted nor denied. The proposed final judgment also enjoins them from future violations of these provisions of the federal securities laws.

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