US SEC sues over Heinz option trading before buy-out
(REUTERS) - United States securities regulators filed suit on Friday against unknown traders in the options of ketchup maker H.J. Heinz Co, alleging they traded on inside information before the company announced a deal to be acquired for US$23 billion (S$28 billion) by Mr Warren Buffett's Berkshire Hathaway Inc and Brazil's 3G Capital.
The suit, in federal court in Manhattan, cites "highly suspicious trading" in Heinz call options just prior to the Feb 14 announcement of the deal. The regulator has frequently in past filed suit against unnamed individuals where it has evidence of wrongdoing, but is still trying to uncover the identities of those involved.
That trading, the suit said, caused the price of the particular call option they bought to soar 1,700 per cent and generated unrealised profits of more than US$1.7 million.
The regulator claims the traders are either in, or trading through accounts in, Zurich, Switzerland. The account had no history of trading in Heinz over the last six or so months.