* Says insider trades made via Swiss account
* Gets order to freeze account's assets
* Second SEC action over 3G deal in six months
Feb 15 U.S. 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, in federal court in Manhattan, cites "highly
suspicious trading" in Heinz call options just prior to the Feb.
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.
It has also obtained an emergency order to freeze assets in
the Swiss account linked to the trading. In the suit, the SEC
refers to the account as the "GS Account" and in a statement
Goldman Sachs Group Inc said it was cooperating with the
"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," Daniel Hawke, chief of the SEC's
Division of Enforcement's Market Abuse Unit said in a statement.
Representatives of Heinz and Berkshire Hathaway were
unavailable for immediate comment. A 3G representative declined
to comment. The founder of 3G, Jorge Paulo Lemann, is from
Brazil, but has made a home in Switzerland since the 1990s. He
has not been implicated in any wrongdoing related to the deal.
After the deal was revealed on Thursday, options market
experts called Wednesday's trading "suspicious and incredibly
The suit marks the second time in less than six months that
the SEC has taken action over a 3G acquisition. In September
2012, the regulator got a court order to freeze the assets of a
Wells Fargo & Co stockbroker who allegedly traded on
inside information about 3G's 2010 acquisition of Burger King.
In that case, the SEC said the stockbroker got the
information from a client who had invested in one of 3G's funds.
The suit also marks the second time in two years that
controversy has erupted over a Berkshire acquisition target.
In March 2011, Berkshire struck a deal to buy chemical
company Lubrizol for $9 billion. Less than three weeks later,
Berkshire said Buffett lieutenant David Sokol was resigning and
disclosed he had been buying Lubrizol shares while pushing
Buffett to acquire the company. The SEC dropped a probe into
Sokol's trading earlier this year.
The suit is Securities and Exchange Commission v. Certain
Unknown Traders in the Securities of H.J. Heinz Co, U.S.
District Court, Southern District of New York, No. 13-1080.