By Jonathan Stempel
(Reuters) - Four Alabama men agreed to settle U.S. Securities and Exchange Commission charges of insider trading related to the 2016 merger of the makers of Utz and Golden Flake potato chips, the regulator said on Tuesday.
The SEC said Birmingham real estate developer James Nall III had learned about privately-held Utz Quality Foods LLC's planned purchase of Golden Enterprises Inc from his father, a longtime Golden director.
It said Nall, known locally as "Mr. Potato Chip" because of his father's role, passed information about the merger to his close friend and business partner, and that the information was later passed on to three other men.
While Nall did not trade on the information, the SEC said the other men traded Golden stock before Hanover, Pennsylvania-based Utz announced its roughly $135 million purchase of the Birmingham company, generating about $437,000 of illegal profit.
The business partner Michael Hale Smith, his father Michael Dwaine Smith, his brother Robert Smith and his boss Walter Tutt agreed to pay a combined $936,000 in fines, disgorged profit and interest to settle with the SEC.
None admitted wrongdoing. Their lawyer did not immediately respond to requests for comment.
The SEC also charged Nall with securities fraud. He could not be immediately be reached for comment, and his lawyer could not immediately be identified. His father, named James Nall IV despite being older than his son James III, was not charged.