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SEC Freezes Assets of Two Brokerage Accounts in Suspected Insider Trading

by Aziz Abdel-Qader
  • SEC’s data analytic investigative tools showed that the timing, size and profitability of these trades are highly suspicious.
SEC Freezes Assets of Two Brokerage Accounts in Suspected Insider Trading
Finance Magnates
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The U.S. Securities and Exchange Commission (SEC) has charged two unknown investors, who used brokerage accounts in the United Kingdom and Lebanon, with illegally profiting from Liberty Interactive’s $1.2 billion acquisition last week of Anchorage-based telecoms firm General Communication Inc (GCI).

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The regulator on Friday filed an emergency court order to freeze assets of brokerage accounts used in the alleged insider trading scheme led by two unknown traders, and possibly other defendants, who allegedly made $1 million in profits by illegally trading GCI shares.

The SEC lawsuit said during the period leading up to the April 4 — when news of Liberty’s acquisition of GCI became public — two brokerage accounts allegedly amassed call option contracts through U.S.-based brokerages and on U.S.-based exchanges. Before these dates, the accounts had never held any shares of the named companies.

SEC’s data analytic investigative tools showed that the timing, size and profitability of these trades are highly suspicious. Following the acquisition announcement, General Communication’s shares rose more than 62 percent and the brokerage account customers allegedly sold the bulk of the contracts.

The SEC is seeking a permanent injunction, a judgement ordering the traders to disgorge the profits with interest and to pay financial penalties, the agency said.

Federal courts have recently reigned in prosecutors on insider trading cases. The government must now prove that anyone who got a tip knew that they were receiving nonpublic information. U.S. authorities recently had to drop a number of insider trading cases because of this more stringent requirement.

Michele Wein Layne, Director of the SEC’s Los Angeles Regional Office noted: “As alleged in our complaint, the timing, size, and profitability of the trades as well as the absence of any recent trading by the accounts in these particular securities make the transactions highly suspicious. We don’t hesitate to act quickly and proactively to freeze accounts and prevent proceeds from dissipating while we continue to investigate dubious transactions and identify the traders behind them.”

The U.S. Securities and Exchange Commission (SEC) has charged two unknown investors, who used brokerage accounts in the United Kingdom and Lebanon, with illegally profiting from Liberty Interactive’s $1.2 billion acquisition last week of Anchorage-based telecoms firm General Communication Inc (GCI).

The London Summit 2017 is coming, get involved!

The regulator on Friday filed an emergency court order to freeze assets of brokerage accounts used in the alleged insider trading scheme led by two unknown traders, and possibly other defendants, who allegedly made $1 million in profits by illegally trading GCI shares.

The SEC lawsuit said during the period leading up to the April 4 — when news of Liberty’s acquisition of GCI became public — two brokerage accounts allegedly amassed call option contracts through U.S.-based brokerages and on U.S.-based exchanges. Before these dates, the accounts had never held any shares of the named companies.

SEC’s data analytic investigative tools showed that the timing, size and profitability of these trades are highly suspicious. Following the acquisition announcement, General Communication’s shares rose more than 62 percent and the brokerage account customers allegedly sold the bulk of the contracts.

The SEC is seeking a permanent injunction, a judgement ordering the traders to disgorge the profits with interest and to pay financial penalties, the agency said.

Federal courts have recently reigned in prosecutors on insider trading cases. The government must now prove that anyone who got a tip knew that they were receiving nonpublic information. U.S. authorities recently had to drop a number of insider trading cases because of this more stringent requirement.

Michele Wein Layne, Director of the SEC’s Los Angeles Regional Office noted: “As alleged in our complaint, the timing, size, and profitability of the trades as well as the absence of any recent trading by the accounts in these particular securities make the transactions highly suspicious. We don’t hesitate to act quickly and proactively to freeze accounts and prevent proceeds from dissipating while we continue to investigate dubious transactions and identify the traders behind them.”

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