An investigation into possible insider trading around the $28 billion deal to sell Pittsburgh's H.J. Heinz Co. has drawn the attention of the FBI, in addition to that of the Securities and Exchange Commission.
The SEC on Friday moved to freeze assets in a Swiss-based account that the commission said was used to reap more than $1.7 million from trading before Thursday's announcement of the deal to sell the food company to Warren Buffett's Berkshire Hathaway and New York-based firm 3G Capital.
The SEC filed a complaint in a federal court in Manhattan alleging that traders had purchased call options the day before the announcement and then profited when the news sent the stock up nearly 20 percent.
According to the court filing, the commission believes those involved were either foreign traders located in Zurich, Switzerland, or traders using foreign accounts there.
An FBI spokeswoman in New York on Tuesday said that it is not uncommon for the SEC to handle the civil side of such cases while the Federal Bureau of Investigation reviews any criminal issues.
"We are aware of the allegations and we are looking into it," she said.
The investigation centers on an unusual spike in options trades involving Heinz.
The New York Times reported Tuesday that the traders bought 2,533 call options last Wednesday through a Swiss account at Goldman Sachs, according to the SEC, which called the activity a "drastic" uptick in trading.
At the time of the SEC's action on Friday, authorities had not yet determined the identity of the traders, and the FBI declined to comment further on Tuesday. Goldman, which is not accused of wrongdoing, was the conduit for the trades. A bank spokesman said Goldman was "cooperating" with the investigation.
The anonymous investors spent nearly $90,000 on the call options, a position that skyrocketed on paper to $1.8 million after the deal was announced Thursday. At the time, Heinz's stock rose to $72.50, up 20 percent from the day before, matching the offer price.
"The timing, size and profitability of the defendants' trades, as well as the lack of prior history of significant trading in Heinz" in the account, the commission said in the complaint, "makes these trades highly suspicious."
The Times said the growing inquiry may cast a cloud over the Heinz deal. While the SEC already raised concerns, the FBI's examination adds to the scrutiny and for the first time raises the prospect of criminal wrongdoing.
Once authorities identify the traders, the SEC and FBI will turn their focus to the universe of insiders who could have leaked details of the deal, the Times said. Dozens of people had knowledge of confidential information about the deal, including bankers, lawyers and executives at both the buyers and the seller.
The New York Times contributed. Teresa F. Lindeman: firstname.lastname@example.org or at 412-263-2018.