Houston stock watchers may have heard that a U.S. Securities and Exchange Commission lawsuit against two traders accused of insider training was dismissed. The alleged breach of securities law related to trading of Onyx Pharmaceutical Inc. shares while it considered a $10 billion takeover attempt from competitor Amgen Inc. The suit was filed against the traders, who are both from Dubai, in July 2013 after three trades were made at the end of June that the SEC called suspicious.
As was being done more frequently, the SEC froze the accounts of the traders, holding $4.6 million in Citigroup Global Markets Inc. accounts and another $4.6 million with Barclays Capital Inc. This legal ruling appeared to be a setback for the freezing tactic, however. The two traders denied doing anything wrong and moved to have the lawsuit dismissed.
The court granted their request, saying the the SEC lacked sufficient facts in support of its charge of insider trading. The judge added that there was no indication from the SEC that the agency knew whether information was inappropriately tipped, who might have done any tipping or who supposedly received the tip. He also characterized the allegations made in the lawsuit by the SEC as consisting of "all belief and no information". A partial freeze remains in place, and the SEC is expected to file an amended complaint.
Securities compliance is vital in initial public offerings, the formation of companies and regular SEC filings, and is necessary for the orderly maintenance of public markets. An attorney with experience in federal securities law may be able to help prepare the documents that are required when a company is seeking to raise financing.
Source: Reuters , "U.S. judge throws out SEC lawsuit over 'suspicious' Onyx trading", Nate Raymond, November 22, 2013