FBI investigating potential insider trading in Heinz
Trading anomalies the day before H.J. Heinz Co. announced its $28 billion acquisition led the FBI to join an investigation of alleged insider trading, the agency said on Tuesday.
The FBI said it would investigate with the Securities and Exchange Commission, which last week filed suit against traders the SEC accused of using knowledge of the pending deal to reap $1.7 million in profit.
“The FBI is aware of the trading anomalies the day before Heinz's announcement,” said a statement from the FBI's field office in New York. “The FBI is consulting with the SEC to determine if a crime was committed.”
Pittsburgh-based Heinz, maker of ketchup and pickles, among other foods, on Thursday said it agreed to be acquired by Warren Buffett's Berkshire Hathaway and Brazilian investment firm 3G Capital for $28 billion, including debt.
The next day, the SEC obtained an emergency court order to freeze assets in a Zurich-based trading account.
“The SEC alleges that prior to any public awareness that Berkshire Hathaway and 3G Capital had agreed to acquire H.J. Heinz Co. in a deal valued at $28 billion, unknown traders took risky bets that Heinz's stock price would increase,” the SEC said.
The SEC did not make public the names of the traders. The FBI declined further comment.
“Despite the obvious logistical challenges of investigating trades involving offshore accounts, we moved swiftly to locate and freeze the assets of these suspicious traders, who now have to make an appearance in court to explain their trading if they want their assets unfrozen,” Sanjay Wadhwa, senior associate director of the SEC's New York Regional Office, said last week.
The SEC and FBI have worked more closely in recent years in the fallout from the financial crisis, said Robert Strauss, economics and public policy professor at Carnegie Mellon University's H.J. Heinz School of Public Policy.
The Heinz acquisition also is “a major transaction,” Strauss said. “One shouldn't be surprised that somebody tries to benefit from inside information.”
The SEC considers insider trading “a high priority,” and last year brought 58 insider-trading actions against 131 individuals and companies, the commission said.
But a majority of those cases were settled, according to an analysis by NERA Economic Consulting, a subsidiary of New York-based Marsh & McLennan Cos. The SEC settled insider-trading cases with 118 individuals and eight companies last year, “almost double the total number” in 2011, NERA said.
Under the proposed acquisition, which requires approval from Heinz shareholders and government regulators, Berkshire Hathaway and 3G Capital would pay Heinz stockholders $72.50 a share. If completed, it would be the largest-ever transaction involving a food industry company.
Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or email@example.com.
Add Alex Nixon to your Google+ circles.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Financial planning for disabled people a little-tapped field
- AT&T evolves beyond phones
- Murray Energy expects to lay off as many as 1,800 more
- This robot is cute, artificially intelligent and employed
- How to cover work history gaps
- Taxes matter in fund investing, even when there’s no bill
- Credit cards with chips no fraud fix, experts say
- FAA: Cockpit email system reduces delays
- Murray, Alpha notify West Virginia coal miners of layoffs
- Fertilizer industry soars amid gas glut
- Parent of Lane Bryant, Justice to buy owner of Ann Taylor for $2B