SEC sues over suspected insider trading around Sanofi's Bioverativ buy

Bioverativ
"Unknown traders" illegally made close to $5 billion on Sanofi's Bioverativ pickup, the SEC alleges. (omloop)

Did insider trading occur around Sanofi’s $11.6 billion deal for Bioverativ? The Securities and Exchange Commission thinks it may have—and it’s suing on that suspicion.

On Friday, the regulator filed a lawsuit in the U.S. District Court for the Southern District of New York against “unknown traders” who made “a series of suspicious transactions” surrounding the tie-up, announced last week. All in all, those transactions made about $4.9 million, the SEC says.

How did they allegedly do it? By using an account in Zurich in the name of Credit Suisse (Switzerland) to buy 1,610 out-of-the-money call options in the days just preceding the deal announcement, according to the complaint. The company then cleared the transactions through Credit Suisse Securities (USA), which executed the purchase orders on a U.S. options exchange, it says.

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In some cases, the suspicious moves dominated market activity; “defendants' purchases made up a significant volume of all reportable options trades on those days, and on several days constituted all or nearly all of the trades in the particular series of options contracts in which defendants traded,” the complaint reads.

RELATED: Sanofi snaps up Biogen's spun-out Bioverativ in $11.6B deal

Now, the SEC is seeking an order to freeze the traders’ assets and bring any funds or assets attained through the alleged insider trading back to the U.S., it said.

The deal agreement, which Sanofi unveiled last Monday, was a big one for the French pharma giant, which has repeatedly been frustrated in its buyout attempts. It’ll mark its largest pickup since 2011’s Genzyme, which has proved to be the company’s most important growth catalyst.

RELATED: Ex-Pfizer employee who leaked M&A targets pleads guilty to insider trading charges

Meanwhile, the industry has seen plenty of other M&A-related insider trading charges. In 2016, for one, the Justice Department arrested and indicted a former Oppenheimer & Co. investment adviser on charges that he traded on inside info relating to Pfizer’s buyout targets.