It usually takes months, if not years, after the excitement of a potential drug merger for law enforcement authorities to track down any trading that looks like it might be tied to inside dope on the deal. Not this time. A week after Onyx Pharmaceuticals ($ONXX) received a $10 billion offer from Amgen ($AMGN), authorities asked federal courts to freeze offshore accounts it believes are tied to insider trading.
The Associated Press says the filing in the U.S. District Court for the Southern District of New York claims the SEC found a "highly suspicious" jump in sales of Onyx call options in the three trading days before the buyout offer was made public.
The Securities and Exchange Commission (SEC) says in its filing that it believes traders bought calls on Onyx shares based on inside knowledge of a potential deal and then, using accounts in the Canary Islands and Beirut, Lebanon, they made a quick $4.8 million. The SEC says the trades by the insiders began June 26, days before it was publicly known that Onyx had received and rejected the offer from Amgen. News of the deal shot Onyx shares up more than 50%.
The SEC has been investigating a number of cases of alleged insider trading. Just last month it filed civil complaints against two brothers accused of buying stock based on secret knowledge of the then-upcoming takeover by Sanofi ($SNY) of consumer health company Chattem. That is the 8th case the Commission has brought against insider trading connected to that deal.
In the same week, a former pension executive at Bristol-Myers Squibb ($BMY) pleaded guilty to securities fraud for netting $310,000 in insider trading profits. In April, it was reported that the SEC had launched an investigation into trades by former Dendreon ($DNDN) CEO Mitchell Gold, and in January, the former portfolio manager for SAC Capital pleaded not guilty to charges that he got insider info that brought his firm $276 million.