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SEC Freezes Brokerage Accounts Behind Alleged Insider Trading
The SEC obtained an emergency court order to freeze assets in 2 brokerage accounts supposedly used last week to earn more than $1 million in insider trading profits in connection with the announced telecommunications merger between Liberty Interactive and General Communication. Following the acquisition announcement, General Communication’s shares rose more than 62%.
According to the SEC’s complaint, … unidentified traders used foreign brokerage accounts in the U.K. (Nomura International) and Lebanon (Cedrus Invest Bank) to purchase call option contracts through U.S.-based brokerages (Interactive Brokers and Nomura Securities Int’l) and on U.S.-based exchanges in the days leading up to the April 4 public announcement of the acquisition.
The traders began purchasing out-of-the-money options 10 days after GCI's special committee met to consider
and negotiate a potential transaction with Liberty and continued trading for the 2 weeks immediately prior to the announcement of the acquisition. Lazard Freres was retained to advise GCI on the deal. The positions were liquidated following the announcement.
The court’s order freezes the foreign accounts’ assets contained in the U.S. brokerages. The SEC’s investigation is ongoing.
