A former high-level assistant at Banco Santander was indicted by a federal grand jury in New York for allegedly earning more than $917,000 in profits through an insider-trading transaction, US law enforcement authorities announced on Tuesday.
Cedric Cañas Maillard, a 41-year-old Spaniard, had served as an advisor to former Santander CEO Alfredo Sáenz before he was fired in 2011. He was acquitted last year by the High Court in Spain of similar charges regarding the use of privileged information to purchase stock from a corporation in Canada.
Last year, Cañas reached a settlement with the US Securities and Exchange Commission (SEC) in which he paid a $1.9 million fine. But he now faces up to 40 years in prison and a $5 million fine if convicted on the two security fraud counts filed with a Manhattan US District Court.
But Cañas has not been arrested and legal experts said it may be impossible for the United States to get him extradited, because of his acquittal in Spain.
“As alleged, Cedric Cañas exploited his access to material non-public information to purchase securities he reasonably knew would increase in value after a public announcement. In short order, he allegedly sold the securities for a nearly $1 million profit,” said Preet Bharara, the US attorney for the Southern District of New York, in a statement.
The indictment, which was unsealed on Tuesday, alleges that Cañas obtained privileged information while at Banco Santander regarding the planned $45 billion acquisition of Potash Corporation of Saskatchewan by BHP Billiton (BHP).
Cañas allegedly purchased 30,000 of Potash equity contracts for which he paid $1,500 in commission fees.
Prosecutors said Cañas broke Banco Santander’s code of ethics by purchasing the financial instruments based on insider information.
The former bank official cashed in his Potash equity on August 17, 2010, the same day it was publicly announced that the corporation’s board had rejected an offer from BHP to purchase Potash common stock for $38.6 billion or $130 per share, the indictment alleges. The stock closed that day at $143.17 a share, giving Cañas an estimated $917,239 in profits.
He was suspended from the bank that same month.
In Spain, the High Court determined that Cañas did not engage in insider trading. “The fact that the defendant Cedric Cañas had earned profits through the Potash operation doesn’t mean” that he broke the law by using privileged information, a panel of judges ruled.
However, one High Court judge, José Ricardo de Prada, voted against acquitting Cañas, saying he had access to “privileged information reserved for a small group of people.”
It was information that was not only “true and valid” but also “predictable” and “potentially could have had great influence on stock prices,” De Prada wrote.