The US Securities and Exchange Commission filed an insider-trading lawsuit accusing three Swiss entities of suspicious trading in Arch Chemicals Inc before the company agreed on July 11 to a $1.2 billion take-over by Switzerland's Lonza Group AG.
According to Monday's complaint, Compania Internacional Financiera SA, Coudree Capital Gestion SA and Chartwell Asset Management Services realised millions of dollars in profit from buying more than 1 million Arch shares in the week prior to the announcement, and selling their shares once the news came out.
Arch shares rose 21.4 percent to $42.17 in the week ending July 8, before Lonza on July 11 said it would buy the Norwalk, Connecticut-based company for $47.20 per share. The shares rose another 12.4 percent that day, closing at $47.37.
According to the SEC complaint filed in Manhattan federal court, CIF and Coudree, each controlled by the Turkish national Yomi Rodrig, bought 612,000 Arch shares in the week before the take-over, while Chartwell bought 425,300 Arch shares.
The SEC said these "highly profitable and suspicious" purchases were based on material, non-public information about the take-over. It seeks to freeze the defendants' assets and have the defendants give up illegal gains and pay civil fines.
A Chartwell spokesman declined to comment. Arch spokesman Dale Walter declined to comment, and Lonza was not immediately available for a comment.
CIF and Rodrig in 2005 agreed to pay $6.32 million to settle an SEC lawsuit accusing them of violating rules to bar short sales of stock just before that stock begins trading. Neither admitted wrongdoing.
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