December 11, 2017

SEC Moves Quickly To Freeze Assets in Alleged Insider Trading

“Three Swiss entities have had their assets frozen by the Securities and Exchange Commission, amidst allegations of insider trading.


The charge came ahead of a public announcement that Lonza Group Ltd, based in Switzerland, would be acquiring Arch Chemicals Inc., a Connecticut company, for $1.2 billion dollars. An SEC complaint was filed on July 15th, alleging that Compania International Financiera S.A., Chartwell Asset Management Services and Coudree Capital Gestion S.A., purchased over one million common shares of Arch between the dates of July 5th and 8th, at prices of $34.39 to $42.89, primarily in UK based accounts. On July 11th, Lonza announced it would pay $47.20 a share for Arch. Immediately following Lonza’s announcement of the Arch acquisition, the Swiss entities began to sell the stock shares for millions of dollars of profit.

According to the complaint filed by the SEC, the three entities were in possession of private information about the proposed Arch acquisition at the time of the share purchases. In the complaint filed in U.S. District Court for the Southern District of New York, the SEC requested emergency relief, due to the fact that since the defendants are foreign entities, proceeds of the trades in question could be transferred into overseas accounts upon clearance at U.S. brokerage firms.

The SEC’s emergency request was granted by the Honorable P. Kevin Castel on July 15th. Certain assets of the defendants were frozen, and all assets obtained from the trading described in the complaint were ordered to be repatriated. A preliminary injunction hearing has been scheduled for July 25th.

“”The SEC’s swift action to secure a judicial freeze order only four days after the observation of suspicious trading prevented millions of dollars from moving offshore,”" said the Director of the SEC’s Division of Enforcement, Robert Khuzami.

In charge of the SEC investigation were Assistant Regional Director Silvestre A. Fontes, Assistant Regional Director Sandra Bailey, and Senior Counsel Thomas J. Rappaport. They were assisted by the Division of Enforcement’s Market Abuse Unit, led by Daniel M. Hawke. Litigation will be conducted by Michael D. Foster. The SEC were assisted by the FINRA Office of Fraud Detection during the investigation.”

SEC Press Release

SEC Freezes Assets of 3 Firms Accused of Insider Trading

US Securities and Commission Website

SEC Sues 3 Firms, Alleges Insider Trading

Insider Trading – Wikipedia


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