* SEC says options trading led to 14,200 pct return
* Trades believed tied to Canary Islands, Beirut
* SEC says Citigroup, Barclays accounts used
By Jonathan Stempel
July 3 The U.S. Securities and Exchange
Commission has filed a lawsuit accusing unnamed defendants of
insider trading in Onyx Pharmaceuticals Inc call
options before the drugmaker publicly rejected a takeover bid by
larger rival Amgen Inc and put itself up for sale.
In a complaint filed on Wednesday with the U.S. District
Court in Manhattan, the SEC said the "highly suspicious" trades
took place between June 26 and 28, and resulted in a profit of
about $4.6 million on a $305,000 investment. The SEC said this
equated to a return of about 14,200 percent.
An emergency court order freezing the assets of the traders
was entered on Wednesday, the SEC said.
On June 30, Onyx rejected as inadequate a $10 billion
unsolicited takeover bid from Amgen that valued it at $120 per
share, 38.2 percent above Onyx's closing price the prior Friday,
but said it would consider other potential acquirers. Shares of
Onyx soared more than 51 percent on July 1.
The SEC believes the defendants bought the options while
possessing material nonpublic information about the Amgen offer,
and seeks to recover illegal profits and impose civil fines.
It said the traders used omnibus accounts at Citigroup
Global Markets and Barclays Capital, and believes
the traders or the accounts are in Canary Islands and Beirut.
Amgen spokeswoman Christine Regan and Onyx spokeswoman
Danielle Bertrand could not immediately be reached for comment.
Citigroup spokeswoman Danielle Romero-Apsilos declined to
comment. Barclays spokesman Mark Lane was not immediately
available for comment.
Call options give investors who expect a share price to rise
the right to buy stock at a pre-set price. Options can result in
large gains or losses relative to the sums invested.
On Monday, Reuters reported a jump in Onyx options trading
during the prior week Onyx is based in South San
Francisco, California, and Amgen in Thousand Oaks, California.
A study conducted for Reuters by Schaeffer's Investment
Research found that options trading activity often rises ahead
of news about merger activity, stock repurchases or investments.
In February, the SEC won a freeze on a Swiss account linked
to suspicious trading in H.J. Heinz Co call options before the
ketchup maker was bought by Warren Buffett's Berkshire Hathaway
Inc and Brazilian firm 3G Capital.
The case is SEC v. One or More Unknown Traders in the
Securities of Onyx Pharmaceuticals Inc, U.S. District Court,
Southern District of New York, No. 13-04645.