SEC Freezes Swiss Assets of Alleged Heinz Inside Traders

On Friday, the U.S. Securities and Exchange Commission sought and received an emergency court order freezing the assets of a Zurich-based trading account. The SEC suspects this account was used to conduct illegal insider trading in Heinz (UNKNOWN: HNZ.DL  ) shares ahead of Berkshire Hathaway's (NYSE: BRK-A  ) (NYSE: BRK-B  ) Thursday buyout announcement.

According to an announcement on the SEC's website, on the day prior to the public announcement of the joint bid for Heinz by Berkshire and 3G Capital, "unknown traders" purchased call options on Heinz stock, sparking a 20% rise in the share price of Heinz, a 1,700% increase in trading volume and enough movement in the price of call options to give these traders a one-day $1.7 million profit.

As SEC Chief of the Division of Enforcement's Market Abuse Unit Daniel M. Hawke explained, both the "timing and size of the trades" appeared "irregular and highly suspicious," raising suspicions "that traders may be improperly acting on confidential nonpublic information."

To determine if foul play took place, the SEC obtained an emergency court order freezing the traders' assets and ordering them to refrain from destroying any evidence. In the event the agencies' concerns turn out to be justified, the SEC will demand that the traders "disgorge their ill-gotten gains with interest, pay financial penalties, and be permanently barred from future violations."


Read/Post Comments (1) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 15, 2013, at 9:08 PM, 123spot wrote:

    Way to go, Rich. Nearly 9:00 Fri night and you're still working. I feel great to see this pursued and the pursuit reported. Spot

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2260023, ~/Articles/ArticleHandler.aspx, 10/24/2014 4:53:53 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement