| NEW YORK, April 23
NEW YORK, April 23 The U.S. Securities and
Exchange Commission on Wednesday won an asset freeze against a
former Banco Santander SA executive it accused of
insider trading ahead of a proposed 2010 takeover of Potash Corp
of Saskatchewan Inc.
The $3.84 million freeze against Cedric Cañas Maillard, a
former adviser to Banco Santander's chief executive and a
graduate of Harvard Business School, represents $961,000 of
alleged illegal profit plus $2.88 million for potential civil
fines. It was imposed by U.S. District Judge Valerie Caproni in
Jose Lopez, a partner at Perkins Coie, representing Cañas,
did not immediately respond to requests for comment.
According to the SEC, Cañas learned on Aug. 5, 2010, that
Santander was helping Anglo-Australian mining group BHP Billiton
Ltd prepare a bid for Potash and tipped co-defendant
Julio Marín Ugedo, a close friend and fellow resident of Spain
who is also a former judge.
The SEC said Cañas bought the equivalent of 30,000 Potash
shares through contracts-for-difference (CFD), a leveraged
security not traded in the United States, while Marín bought
1,393 Potash shares.
It said these bets paid off when Potash shares shot up more
than 25 percent on Aug. 17, 2010, although the Saskatoon-based
company had that day rejected BHP Billiton's $38.6 billion bid.
Cañas argued he could not be liable for insider trading
under a 2010 U.S. Supreme Court precedent, Morrison v. National
Australia Bank. He said this was because the CFDs, which he
bought in Luxembourg, were not transactions "in connection with"
the purchase or sale of a security listed on a U.S. exchange.
Morrison is often cited for imposing a presumption against
applying U.S. law to conduct that occurred outside the country.
But Caproni rejected Cañas' "crabbed" reading of Morrison,
calling him a "sophisticated investor" who knew his transactions
required purchases and sales on the New York Stock Exchange by
Internaxx, a service now known as TD Direct Investing
International and owned by Toronto-Dominion Bank.
"Although Internaxx was an unwitting player, the domestic
market was harmed by the trades that were directly and
inextricably bound with (Cañas') fraudulent conduct," she wrote.
Cañas also argued that the SEC civil case should be dropped
because a Spanish court had acquitted him of related criminal
charges in January. Caproni disagreed, noting the different
burdens of proof in criminal and civil cases.
Santander and Toronto-Dominion were not accused of
wrongdoing in the SEC case. Marín has not responded to the SEC
complaint, court records show.
Canada ultimately blocked the Potash takeover on the ground
that it did not provide a "net benefit" to the country.
The case is SEC v. Cañas Maillard et al, U.S. District
Court, Southern District of New York, No. 13-05299.
(Reporting by Jonathan Stempel in New York. Editing by Andre