Unknown traders are being sued by US markets regulator the Securities and Exchange Commission (SEC) for allegedly using information not available to the public in relation to the buyout of H.J. Heinz Co by Berkshire Hathaway Inc and Brazil's 3G Capital. The buyout deal was worth $23 billion.
The investigation relates to "highly suspicious trading" in call options of Heinz leading up to the buyout announcement on February 14th, 2013. It is believed the trading took place from accounts register in Zurich, Switzerland that had no previous activity trading in Heinz in the 6 months prior to the buyout announcement.
Daniel Hawke of the SEC has 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".
It is reported that the traders at the centre of the investigation generated unrealized gains of $1.7 million after the call options they purchased prior to the announcement rocketed by more than 1,700 percent post buyout announcement.
SEC sues over Heinz option trading before buyout
SEC sues unknown traders over Heinz options
UPDATE 3-U.S. SEC sues over Heinz option trading before buyout
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