(Reuters) - A former Tallgrass Energy board member and his friends will pay $2.2 million to settle insider trading charges related to a Blackstone-led $3.03 billion buyout offer for the oil pipeline operator in 2019, the U.S. SEC said on Tuesday.
The U.S. Securities and Exchange Commission (SEC) announced the insider trading charges and the settlement in a statement.
The SEC alleged that Roy Cook, a former board member of Tallgrass Energy, and four of his friends traded on nonpublic information before the Blackstone-led group's buyout offer was announced in August 2019. Tallgrass shares jumped 36% after the deal was made public.
Cook and his friends agreed to pay a civil penalty and disgorge their "illicit trading profits" without admitting or denying the allegations, the SEC said.
Terms of the Blackstone (NYSE:BX) deal, which valued Tallgrass at $6.3 billion, were struck ahead of a collapse in energy prices in 2020 when global fuel demand plummeted due to COVID-19 pandemic-related business shutdowns. The deal closed at that valuation making it a rare case of a pre-market crash deal going ahead without a price cut.