Juan Garcia, 35, head of Europe equity derivatives research at Banco Santander, which is advising BHP on its bid, was charged by the SEC alongside Luis Sanchez, another Madrid resident. The regulator obtained an order on Friday, unsealed by a US court on Tuesday, to freeze the two men’s assets, claiming they had made nearly $1.1m in illegal profits by trading in advance of the August 17 announcement of BHP’s interest by PotashCorp.
Days before the bid became public, Mr Garcia and Mr Sanchez bought hundreds of “out of the money” call options in PotashCorp that would pay out only if the fertiliser company’s share price rose, the SEC alleged. The duo jointly spent just over $61,000 to buy the options, using accounts at Interactive Brokers, a US brokerage, the SEC claimed.
After PotashCorp announced the BHP bid of $130 a share, representing a 16 per cent premium over the $112.15 closing price the previous day, the two men sold the options for profits of almost $1.1m, the regulator alleged.
A request by Mr Sanchez on August 18 to transfer €412,000 (more than $500,000) from his Interactive Brokers account to a bank in Spain was refused by the brokerage, according to the SEC filing.