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SEC files insider trading case against two regarding VNU bonds
By Angela McDaniels
Tacoma, Wash., May 5 - The Securities and Exchange Commission said it filed a civil action alleging that Renato Negrin, a former portfolio manager at hedge fund investment adviser Millennium Partners, LP, and Jon-Paul Rorech, a salesman at Deutsche Bank Securities Inc., engaged in insider trading in the credit-default swaps of VNU NV.
The action was filed in the U.S. District Court for the Southern District of New York on Tuesday and is the first CDS insider trading case filed by the SEC, the commission said in a news release.
According to the SEC's complaint, Rorech learned information from Deutsche Bank investment bankers about a change to the proposed VNU bond offering that was expected to increase the price of the CDSs on VNU bonds. Deutsche Bank was the lead underwriter for a proposed bond offering by VNU.
The SEC alleged that Rorech illegally tipped Negrin about the contemplated change to the bond structure and Negrin then purchased CDSs on VNU for a Millennium hedge fund.
When news of the restructured bond offering became public in late July 2006, the price of VNU CDSs substantially increased, and Negrin closed Millennium's VNU CDS position at a profit of about $1.2 million, the SEC said.
The complaint charges violations of Section 10(b) and Rule 10b-5 of the Securities Exchange Act and seeks a final judgment permanently enjoining Rorech and Negrin from future violations of the federal securities laws and ordering them to pay financial penalties and to disgorge ill-gotten gains with prejudgment interest.
VNU is a Haalem, the Netherlands-based holding company that owns market research company Nielsen Media Research, Inc. and other media businesses.
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