SEC Charges Insider Trading at Onyx Pharmaceuticals

SEC Charges Insider Trading at Onyx Pharmaceuticals

July 5th, 2013 // 7:07 pm @

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About one week after word got out that Onyx Pharmaceuticals turned down a $10 billion offer from Amgen, the SEC filed a suit claiming that several people had committed insider trading and made almost $5 million in illegal profits on an investment of about $300,000.

The traders, who are not named, allegedly bought call options on 6/26-28, just before the statement on June 30 that Onyx had turned down the Amgen offer. This rejection was reported 6/28 in the Financial Post, which stressed that the information regarding the offer had been in wide circulation.

The SEC stated that due to the announcement on June 30, the stock for Onyx went up 50% on the next day. The trading volume went up over 900%. The offer price of $120 by Amgen was a 40% increase in premium before the June 30 rejection by Onyx.

In the complain, the SEC stated that traders caused a very suspicious spike in the trading of Onyx options in the three days of trading before the buyout went public. Call options provide investors who think the share price will go up a right to buy stock at a price that was preset for a certain time period. SEC noted that there was not much trading in the call options for Onyx before the offer went public.

The SEC got an emergency order from court to freeze all assets of any traders who used foreign accounts, related to any transactions in call options for Onyx, and it prohibits any tradings from shredding or deleting evidence. The SEC noted that the traders used accounts at Barclays and Citigroup Global Markets. The accounts are in the Canary Islands and also Beiruit.


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