The U.S. Securities and Exchange Commission has filed a complaint with the federal court in Manhattan alleging suspicious trading in H. J. Heinz Co. (HNZ) before Berkshire Hathaway (BRKa) and 3G Capital's acquisition of the Pittsburgh, Pennsylvania-based company.
The SEC said it has received an emergency court order on Friday to freeze assets in a Zurich, Switzerland-based trading account used in suspected insider trading that was used to reap more than $1.7 million. The regulator said that the emergency court order obtained freezes the traders' assets and prohibits them from destroying any evidence.
The SEC alleges that prior to any public awareness about the deal, unknown traders took risky bets that Heinz's stock price would increase and were in possession of material nonpublic information about the impending acquisition.
The SEC noted that timing and size of the trades were highly suspicious because the account through the options were bought had no history of trading Heinz securities in the last six months.
Daniel M. Hawke, Chief of the Division of Enforcement's Market Abuse Unit, said, "Irregular and highly suspicious options trading immediately in front of a merger or acquisition announcement is a serious red flag that traders may be improperly acting on confidential nonpublic information,"
SEC said it is seeking a final judgment ordering the traders to disgorge their ill-gotten gains with interest, pay financial penalties and also be permanently barred from future violations.
by RTT Staff Writer
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