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On Thursday, the SEC sued a former broker, Waldyr Da Silva Prado Neto, who used to work for Wells Fargo & Co and Morgan Stanley Smith Barney, charging him with insider trading done ahead of a Burger King Worlwide Inc deal. The SEC said that it had obtained a court order to freeze the assets of the accused broker, who had allegedly begun transferring assets out of the country and had already put up his Miami home for sale.
The SEC said that Prado learned of the Burger King deal from a brokerage customer while working for Wells Fargo in Miami. Then Prado used the information about Burger King’s impending acquisition by private equity firm 3G Capital Partners Ltd to tip off others and also to net about $175,000 by trading in the stock ahead of the deal.
According to documents produced by the SEC Prado had emailed customers in Portuguese to call him to get the insider information. Some recipients of his emails were later found to have called him up and then engaged in purchasing Burger King call options during the next two days.
Sanjay Wadhwa, the deputy chief of the SEC enforcement division’s market abuse unit told the media, “Prado’s emails and other communications may have been sent from Brazil and written in Portuguese, but our commitment to prosecute illegal insider trading on U.S. markets knows no geographic or language barrier.”
According to industry sources, Prado’s employment with Morgan Stanley has already been terminated and Wells Fargo was cooperating with SEC in the investigation.
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