U.S. regulators investigate Zurich-based traders for insider trading in Heinz deal
New York, NY, United States (4E) – U.S. regulators Friday received an emergency court order allowing them to freeze a Swiss bank account suspected for insider trading before the buyout of Heinz by Berkshire Hathaway and 3G Capital was announced.
The Securities and Exchange Commission (SEC) said it requested an emergency court order less than 40 hours after the Berkshire-3G Capital announcement to buy Heinz.
The court order sought to freeze the assets of Zurich-based traders and keep them from destroying any evidence. The SEC said the traders may have earned as much as $1.7mn for their “highly suspicious options trading activity.”
Warren Buffett’s Berkshire Hathaway and Brazil-based 3G announced the deal on Thursday, pushing Heinz’s stock price to rise by about 20 per cent from $60.8 to the takeover offer price of $72.50.
The SEC claims that the value of the traded call options from a particular Swiss account climbed by 1,700 per cent at the time deal was announced.
Sanjay Wadhwa of the SEC’s New York Regional Office said that the court order will ensure that the traders are forced to appear in court to explain their decision to trade Heinz options the day prior to the announcement of the deal.
He also added that since the investigation may involved offshore accounts, the agency could face logistical challenges in investigating the trades.