UPDATE 2-SEC opens probe after Dow Chemical firings-sources
(Recasts first paragraph; adds details, Kreinberg representative)
By Euan Rocha
NEW YORK, May 25 (Reuters) - The U.S. Securities and Exchange Commission is probing whether there was any unusual trading in Dow Chemical Co.'s (DOW.N) shares earlier this year, sources close to the matter said on Friday.
The inquiry from U.S. securities regulator, which is still in the informal stage, centers around Dow's firings of two senior officials, who were accused by the company of having engaged in unauthorized talks to sell the business, the sources said.
Dow last month said Romeo Kreinberg, head of its specialty businesses and Pedro Reinhard, a senior adviser and board member, had engaged in "business activity that was highly inappropriate."
Dow, the largest U.S. chemical maker, was earlier this year the subject of numerous leveraged buyout rumors, that had spurred its shares to a 52-week high.
The SEC declined to comment.
A spokesman for Midland, Michigan-based Dow declined to comment, saying that the SEC does not want individuals commenting about the existence or nonexistence of informal inquiries.
Dow fired the two men, after alleging they had conducted multiple meetings, in multiple locations, over a period of several months, relating to the potential sale of the company.
Both men have denied the allegations and sued the company.
"I have and will continue to categorically deny that I have been part of any secret effort to take over or acquire Dow Chemical," said Reinhard, in a statement earlier this month.
A spokeswoman for Reinhard declined to comment on the SEC probe.
Kreinberg has also denied the company's allegations and said no proof of anything was offered to him.
"There is no possible way in which Mr. Kreinberg did anything, which implicates any SEC regulation," Stanley Arkin, representing Kreinberg in his suit against Dow, told Reuters on Friday.
The SEC inquiry may also look at a deal that Dow pursued, according to a report on the New York Times Web site on Friday.
Last fall, Dow made an overture to buy DuPont Co. (DD.N) in a deal worth more than $40 billion, the paper said. DuPont never engaged in negotiations, the paper said.
DuPont said in a statement that it had no comment on the newspaper article.
The paper also said JPMorgan Chase & Co. (JPM.N), one of Dow's banks, had reached out to several private equity firms to inquire about their interest in a buyout of the company.
The SEC has sought information from Dow, Kreinberg and Reinhard, the paper said. It is also seeking information from JPMorgan about the work the bank had done, the paper said.
A representative for JPMorgan declined to comment. (Additional reporting by Paritosh Bansal)
