* Kuwaiti financier committed suicide after being charged
* SEC says hoax news issued on Harman, Textron
* Lawyers for defendants not immediately available
By Jonathan Stempel
NEW YORK, Aug 4 (Reuters) - A U.S. regulator has reached a $6.5 million settlement of civil insider trading charges relating to hoax takeover news allegedly issued last year by a Kuwaiti financier who later committed suicide.
The U.S. Securities and Exchange Commission alleged that Hazem Al-Braikan, who was chief executive of a company in which Citigroup Inc (C.N) held a 10 percent stake, reaped illegal profits after misleading the public and media about possible takeover bids for stereo maker Harman International Industries Inc HAR.N and corporate jet builder Textron Inc (TXT.N).
The commission said Al-Braikan traded in accounts held in his own name, in his company Al Raya Investment Co, and for himself and others at the Kuwaiti brokerage Kipco Asset Management Co. Citigroup held a 10 percent stake in Al-Raya.
Al-Braikan was found dead of a gunshot wound to the head on July 26, 2009, three days after being sued by the SEC, in what Kuwaiti police called a suicide. [ID:nLQ671358] He was 37.
The SEC on Wednesday said the settlement calls for Al-Braikan’s estate to give up $2.58 million of illegal profits, including $1.69 million by Al-Braikan and $894,000 by a person he tipped about Harman.
It also calls for Al-Raya to give up $1.21 million of illegal profit and pay a $300,000 fine, and for Kipco to give up $2.44 million on behalf of some of its clients.
The SEC said it has dismissed United Gulf Bank UGBB.BH UGBK.KW as a defendant.
According to the regulator, Al-Braikan had in April 2009 contacted media outlets about an alleged “scoop” regarding a Middle Eastern company’s upcoming takeover bid for Textron.
Three months later, according to the SEC, Al-Braikan faxed and e-mailed to several media a fake release that a nonexistent Saudi Arabian investment group planned to acquire Harman, and made more than 70 phone calls to promote the bogus news.
The SEC said Al-Braikan bought large amounts of stock in both companies before distributing the fake news, and sold his positions once the stock prices had become inflated.
Prior to his death, Al-Braikan was considered a respected figure in Kuwaiti money management, and was a familiar figure at high-level financial functions. [ID:nN23397991]
Lawyers for Al-Braikan’s estate, Al-Raya and Kipco did not immediately return calls seeking comment. The SEC also did not immediately return a call. A Citigroup spokeswoman had no immediate comment.
The case is SEC v. Al-Raya Investment Co et al, U.S. District Court, Southern District of New York, No. 09-06533. (Reporting by Jonathan Stempel in New York; Editing by Sofina Mirza-Reid