The criminal probe is focusing on “anomalies” seen before the announcement came that H.J. Heinz was being purchased.
Bloomberg reports that Peter Donald, a spokesman for the FBI’s office in New York, stated of the probe:
“The FBI is aware of trading anomalies the day before the Heinz announcement. The FBI is consulting with the SEC to determine if a crime was committed.”
The trading in question netted $1.7 million by unidentified traders. They purchased the ketchup-maker’s stock the day before the announcement was made.
The SEC has already filed a lawsuit against the traders over “suspicious trading” through an account at Goldman Sachs Group. The transactions were done through an account based in Zurich and involving call-option contracts.
The Washington Post notes that Daniel M. Hawke, chief of the agency’s market-abuse unit, released a statement saying, in part:
“Irregular and highly suspicious options trading immediately in front of a merger or acquisition announcement is a serious red flag that traders may be acting on confidential non-public information.”
Heinz was purchased by a consortium made up of 3G Capital and Berkshire Hathaway. The account that made the trades has seen its assets freeze. US District Judge Jed S. Rakoff in Manhattan froze the account and stated that those connected with it should appear before him.
They will need to explain why the assets shouldn’t be restrained permanently. A spokesman representing the companies has declined to comment on the insider trading claims. Sanjay Wadhwa, senior associate director with the SEC’s New York office, stated that the agency was able to quickly identify the account that made the trades. She added:
“Despite the obvious logistical challenges of investigating traders involving offshore accounts, we moved swiftly to locate and freeze the assets of these suspicious traders, who now have to make an appearance in court to explain their trading if they want assets unfrozen.”
The person or people responsible for the suspicious Heinz stock trades will have to appear in court to explain the situation on February 22.