SEC sues over Heinz option trading before buyout

[No Elephants]

SEC sues over Heinz option trading before buyout



By Ben Berkowitz

Fri Feb 15, 2013 8:52pm EST

(Reuters) - 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 $23 billion by Warren Buffett's Berkshire Hathaway Inc and Brazil's 3G Capital.

The suit marks the second time in six months that the SEC has taken legal action for alleged insider trading on a 3G deal.

The suit, in federal court in Manhattan, cites "highly suspicious trading" in Heinz call options just prior to the February 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 percent and generated unrealized profits of more than $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.

http://www.reuters.com/article/2013/02/16/us-heinz-berkshire-sec-idUSBRE91E14R20130216

Lawsuit? Why not a criminal prosecution?

Ah, those crooks! Er, I mean, shrewd investors.

[Enthusiast]

1. I like your short yet accurate editorial.

Yeah. Why a lawsuit? Shouldn't the SEC get a search warrant and go in full force? They didn't show Martha Stewart such consideration. WTF? It's a new age! The new world order that Bush Sr. spoke of.

[No Elephants]

2. Well, it was very important to make an example of Martha Stewart.

Why, I have no idea. But, clearly, it was more important than stopping Bernie Madoff. One trader alone went to the SEC three times about Madoff because his customers and employers were complaining that he was not producing the results that Madoff was producing. He said he explained to them exactly what Madoff was doing and how he was doing it. But the SEC could not seem to find any wrongdoing.

After all, how can we expect regulators in this millenium to see through a Ponzi scheme? That's so 20th century!