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(Corrects headline to show trading was in Heinz options, not shares)
By Jonathan Stempel
NEW YORK, April 2 (Reuters) - A federal judge has approved the U.S. Securities and Exchange Commission's $4.8 million settlement with two Brazilian brothers it accused of insider trading in H.J. Heinz Co, after earlier having questioned why the accord did not include an admission of wrongdoing.
U.S. District Judge Jed Rakoff in Manhattan said the "substantial additional information" provided by the SEC, "the unique circumstances of this case, and further guarantees of prompt payment of the proposed fines" justified approval, according to an order made public on Wednesday.
Rakoff is a leading critic of SEC settlements that say defendants neither admit nor deny wrongdoing. In 2011 he rejected Citigroup Inc's $285 million fraud settlement with the regulator for that reason.
In the Heinz case, Michel and Rodrigo Terpins will pay $3 million of fines and give up $1.81 million of profit related to their purchase of Heinz stock options one day before Warren Buffett's Berkshire Hathaway Inc and Brazilian private equity firm 3G Capital agreed to buy the ketchup maker.
The SEC said Rodrigo Terpins, who was at the time vacationing at Walt Disney World in Orlando, Florida, bought $90,000 Heinz options based on an illegal tip from his brother.
It said the options were purchased through a family-owned Cayman Islands entity, Alpine Swift Ltd, and rose 2,000 percent in value in a single day after the roughly $23.3 billion takeover was announced in February 2013.
Dwight Bostwick, a lawyer for Michel Terpins, and Steve Kaufman, a lawyer for Rodrigo Terpins, did not immediately respond to requests for comment.
SEC spokesman John Nester declined immediate comment.
Responding on Jan. 30 to Rakoff's request for more facts in the Heinz case, the SEC said it believed the settlements with the brothers "reflect a fair, adequate and reasonable resolution."
Heinz agreed to the buyout four months before SEC Chair Mary Jo White modified the decades-old SEC practice of letting defendants settle without addressing the alleged wrongdoing.
The SEC now requires admissions in a broader array of cases, and since June at least seven settlements have included them.
In the Heinz case, settlement papers do not contain the "no-admit, no-deny" language about which Rakoff expressed concern, but according to the SEC they include a clause that makes clear that the removal "should not be construed as an admission."
Rakoff has said judges cannot easily review the fairness of SEC settlements that do not require admissions of wrongdoing, and that the practice does not serve the public interest.
In February 2013, the 2nd U.S. Circuit Court of Appeals heard arguments on whether Rakoff was correct to reject the Citigroup accord, which concerned securities sold before the financial crisis. The appeals court has yet to rule.
The case is SEC v. Certain Unknown Traders in the Securities of H.J. Heinz Co, U.S. District Court, Southern District of New York, No. 13-01080. (Reporting by Jonathan Stempel in New York; Editing by Leslie Adler)