SEC Obtains Asset Freezes Against Swiss Entities Accused of Insider Trading
Yoomi Lee | Bloomberg Law
The Securities and Exchange Commission (SEC) obtained asset freezes and other emergency relief against three Swiss-based investment entities, Compania Internacional Financiera S.A., Coudree Capital Gestion S.A., and Chartwell Asset Management Services (collectively, Defendants), for allegedly purchasing Arch Chemicals, Inc. (Arch) securities while in possession of material, non-public information about a proposed acquisition of Arch. As such, the SEC alleges violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC also seeks injunctive relief against Defendants, disgorgement, and payment of civil monetary penalties.
The SEC requested emergency relief maintaining that Defendants are foreign entities that used foreign accounts to place trades, and thus, there was a “substantial risk” that proceeds from the sale of Arch securities may be transferred beyond the jurisdiction of U.S. courts. Robert Khuzami, Director of the SEC’s Division of Enforcement, stated that the SEC’s quick action to obtain an asset freeze order only four days after the “observation of suspicious trading” prevented millions of dollars from being transferred overseas.
The SEC alleged that Defendants purchased a large amount of Arch securities, whose common stock trades on the New York Stock Exchange, in the days leading up to a July 11, 2011 acquisition announcement by Lonza Group Ltd (Lonza). Under the acquisition agreement, Lonza acquired all of Arch’s outstanding common stock at $47.20 a share. Defendants allegedly purchased Arch securities between July 5, 2011 and July 8, 2011, before the share price increased 21 percent. According to the SEC, Arch’s common stock price rose an additional 12 percent to $47.37 on the day of the announcement of the acquisition. Further, Defendants purportedly began to sell Arch securities immediately after the announcement of the acquisition, making millions of dollars in profits. The SEC claims that there was no public information regarding the proposed acquisition or any other significant news about Arch available to the public.
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