The SEC was all over trades executed ahead of a 7/11 corporate takeover announcement, which appeared to have been based on insider information.  The SEC swung into action, obtaining a temporary court order on 7/15 to freeze the proceeds of those transactions.  The court recently extending the freeze of assets in excess of $32 million.  Three Swiss entities that controlled the assets now have been charged with insider trading.

Allegations of SEC Complaint.   The scenario began with the public announcement that Swiss-based Lonza Group Ltd. will acquire CT-based Arch Chemicals, Inc.  Days before the announcement, Swiss entities Compania International Financiera and Coudree Capital Gestion purchased more than 687,000 common shares of Arch Chemicals, mostly in London accounts.  At the same time, Swiss-based Chartwell Asset Management Services purchased contracts for difference ("CFDs")equivalent to 425,300 shares of Arch Chemicals - also through a London account.

Immediately after the takeover announcement, the three Swiss entities began selling off their holdings and CFDs, reaping millions in profits.  The SEC alleges that, at the time of their stock purchases, all three were in possession of material, non-public information about the proposed merger.

Allegations in the SEC Complaint.   The three entities were charged with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.  In addition to the asset freeze, the SEC is seeking disgorgement of illegal profits, interest and civil monetary penalties. 

For additional information, go to:    [SEC Litigation Release 22049, 8/1/11]