Burger King 'sandwich deal' yields U.S. criminal insider charges

Mon Jan 27, 2014 6:30pm EST
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By Jonathan Stempel

NEW YORK (Reuters) - U.S. prosecutors have criminally charged a former Wells Fargo & Co broker and a banker with insider trading in Burger King securities ahead of a 2010 buyout of the fast-food chain.

Waldyr Da Silva Prado Neto, who worked for Wells Fargo Advisors, alleged learned from a client that private equity firm 3G Capital Partners planned to buy Burger King, and passed the news to Igor Cornelsen, a banker and fellow Brazilian who had been prodding him for tips.

Prosecutors said the unnamed client was an investor in a 3G buyout fund who often shared confidential financial information with Prado on the understanding it would be kept confidential.

Instead, investigators said the defendants communicated with each other in Portuguese about a possible buyout.

They said this included an August 18, 2010 email exchange in which Cornelsen asked "is the sandwich deal going to happen," prompting Prado to reply "it's going to happen."

The roughly $3.26 billion buyout was announced two weeks later and valued Burger King at $24 per share, 46 percent above where it traded before buyout rumors surfaced. Prosecutors said Cornelsen and Prado both traded illegally in Burger King, making a respective $1.68 million and $175,000 of profit.

"When Waldyr Prado and Igor Cornelsen traded around a 'sandwich deal,' the defendants knew they were committing insider trading," U.S. Attorney Preet Bharara in Manhattan said in a statement.

Prado, 43, lives in Porto Seguro, Brazil, and Cornelsen, 65, in Sao Paolo. Neither has been arrested.   Continued...

The sign on a Burger King restaurant is shown in Miami, Florida October 28, 2013. Picture taken October 28, 2013. REUTERS/Joe Skipper