Kraft Heinz Insider Trading Case Revived by Top Delaware Court

An Austrian asset manager’s insider trading allegations against Kraft Heinz Co. over $1.2 billion in stock sales shortly before Kraft’s share prices plummeted in 2018 were revived Monday by the Delaware Supreme Court.

Claims of newly discovered evidence filed by Erste Asset Managemenx GmbH, an affiliate of Erste Group Bank AG, should have been considered by a lower court because Delaware statutes allows the basis of fraud to include actions between parties that prevents the fair and adequate presentation of a case, Justice Abigail M. LeGrow said in an opinion for the court’s full five-member panel.

“A party cannot make a false public disclosure outside litigation that the other side relies on in its allegations in the complaint, repeat those false representations in court, obtain a final ruling based on those false representations, and then argue that those false representations were entirely outside the judicial process and that the defrauded party is to blame for relying on them,” she wrote in the 34-page opinion.

Erste sought to reopen claims that 3G Capital Inc. affiliates and their wealthy Brazilian principals dumped $1.2 billion worth of Kraft stock. The Delaware Chancery Court dismissed Erste’s effort in an Aug. 8, 2024, opinion finding Erste didn’t show new evidence that supported its attempt to rekindle insider trading allegations that had been tossed in 2021, a decision later affirmed by the state’s top court.

The high court’s opinion reverses the 2024 opinion and remands the matter to the Chancery Court. LeGrow cautioned the ruling, rather than having a broad application, “remains cabined to instances of fraud that impair a party’s ability to present its case in litigation.”

Erste’s claims focused on Kraft director John Cahill’s ties to 3G and his compensation for the consulting work he did for Kraft from 2015 through 2019.

Oral arguments before the high court on March 12 focused on an August 2019 Kraft proxy statement indicating that Cahill’s consulting arrangement with had “terminated” in advance of his receipt of $500,000 in stock options. Erste said it only discovered later through litigation that Cahill, who served as Kraft’s CEO before its merger with Heinz, continued to do consulting work after the proxy statement and that his options wouldn’t vest for three years.

The “misrepresentations regarding Cahill’s consultancy” prevented Erste from adequately presenting the argument that he wasn’t independent from 3G “on the basis of his ongoing consulting relationship with Kraft Heinz and its 3G-controlled management and Compensation Committee,” LeGrow said.

“In denying Erste’s claim, the Court of Chancery erred in limiting its analysis to whether Erste met the ‘fraud on the court’ standard instead of considering the broader scope” of fraud, she said.

Erste is represented by Friedlander & Gorris PA and Bragar Eagel & Squire PC. Kraft and the 3G entities are represented by Paul, Weiss, Rifkind, Wharton & Garrison LLP, Potter Anderson & Corroon LLP, and Kirkland & Ellis LLP.

The case is Erste Asset Mgmt. GmbH v. Hees, Del., No. 374,2024, opinion 6/9/25.