By Jed Horowitz and Jonathan Stempel
NEW YORK Jan 14 A former Wells Fargo & Co
broker in Miami has been ordered to pay $5.63 million
for trading Burger King securities ahead of a 2010 buyout of the
fast-food chain based on inside information he received from a
But the judgment, announced Tuesday by the U.S. Securities
and Exchange Commission against former broker Waldyr Da Silva
Prado Neto, may be largely uncollectible because the defendant
is believed to have fled to Brazil, has not mounted a defense,
and has ignored SEC efforts to reach him.
While the SEC in September 2012 won a court order freezing
Prado's assets, including a condominium unit in Miami Beach,
Florida, the assets amount to only about one-fifth of the
judgment. Prado had put the home up for sale and began moving
his assets out of the country shortly before the freeze.
Prado, a Brazilian who had worked for Wells Fargo Advisors,
was accused of trading in Burger King stock and options after
learning from a long-time client that private equity firm 3G
Capital Partners was going to buy the chain.
The client, an investor in a 3G buyout fund, often shared
confidential financial information with Prado on the
understanding it would be kept confidential, the SEC said.
But Prado instead used the Burger King information to
generate $175,000 in profit, and tipped at least four of his
clients ahead of the buyout, court papers show.
One client, former banker Igor Cornelsen, allegedly started
betting on Burger King the prior May after Prado told him in an
email written in Portuguese: "I have some info ... You have to
It said Cornelsen would later seek tips by sending cryptic
emails such as "Is the sandwich deal going to happen?"
The roughly $3.26 billion buyout announced in September 2010
valued Burger King at $24 per share, 46 percent above where the
shares traded two days earlier when buyout rumors surfaced.
Under the final judgment imposed last week by U.S. District
Judge Katherine Polk Failla in Manhattan, Prado was ordered to
pay a nearly $5.2 million fine, plus $397,110 in ill-gotten
gains and $41,622 of interest.
Prado left Wells Fargo in May 2012 for Morgan Stanley
, but was terminated four months later for job abandonment
when he fled the country, according to the SEC. He is now in
Brazil, a person familiar with the case said.
A lawyer who has represented Prado did not immediately
respond to requests for comment. Prado could not be reached.
Cornelsen settled with the SEC for $5.18 million in November
Burger King is now known as Burger King Worldwide Holdings
Inc. The Miami-based company again became publicly
traded in June 2012 through a "reverse merger" involving a shell
company co-founded by hedge fund manager William Ackman.
The SEC and other regulators have also been examining
whether there was insider trading ahead of last February's
buyout of ketchup maker H.J. Heinz Co by 3G and Warren Buffett's
Berkshire Hathaway Inc.
The case is SEC v. Prado, U.S. District Court, Southern
District of New York, No. 12-07094.