The Securities and Exchange Commission opened an insider-trading investigation in the $23 billion acquisition of the Pittsburgh-based H.J. Heinz food company, suggesting the possibility of illegal stock activity as the deal took shape.
Berkshire Hathaway, the conglomerate owned by billionaire Warren Buffet, and the Brazilian investment firm 3G Capital agreed to acquire Heinz for $72.50 per share,
The New York Times reports.
Agency officials first noticed a suspicious spike in Heinz trading on Wednesday, The Times reports.
Under scrutiny in the commission’s preliminary investigation is the limited number of insiders who might have told traders about the deal, according to The Times.
The investigation is expected to focus on options trading in Heinz stock on Wall Street, The Times reports. In a “call” option, investors can place a positive bet on the stock, without actually making a commitment to buy the shares.
Instead, investors may to buy the stock at a particular price at a future date, The Times reports.
As recently as Tuesday, trading activity in Heinz options was scant, The Times reports. But by Wednesday, as the companies were completing the deal, data show that trading in Heinz stock options soared, The Times reports.
After the deal was announced, the price of Heinz’s stock rose greatly, finishing up nearly 20 percent on Thursday, to close at $72.50, matching the offering price by Berkshire Hathaway and 3G Capital, The Times reports.
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