The FBI will join the U.S. Securities and Exchange Commission in investigating potential insider trading a day ahead of Warren Buffett’s announcement he was going to take H.J. Heinz private.
“We are consulting with the SEC to determine if a crime was committed,” Kelly Langmesser, a spokeswoman in the FBI’s New York office told the Washington Post.
The SEC has already frozen a Swiss bank account, which it calls the “GS Account” in its complaint filed with a federal court. A report by the Washington Post states that it is a Goldman Sachs customer account. A spokesman told the Post that Goldman is cooperating with the investigation and there is no mention of Goldman Sachs in the SEC complaint filing.
“The SEC alleges that the unknown traders were in possession of material nonpublic information about the impending acquisition when they purchased out-of-the-money Heinz call options the day before the announcement,” says the SEC’s press release.
On Feb. 14 Buffett announced he would take H.J. Heinz private for a total deal consideration of $28 billion including debt. The option trades were placed on Feb. 13 from an account, which the SEC says did not trade Heinz stock or options for at least six months, something the SEC says is “highly suspicious.”
An analysis by Bloomberg shows that the volume of the option contract traded was nearly 10 times higher Feb. 13 than the previous day. In total, 2,533 call options were bought, which rose 1,700 percent on the announcement of the merger the following day.
