U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22049 / July 20, 2011
Securities and Exchange Commission v. Compania International Financiera S.A., et al., Civil Action No. 11-cv-04904-DLC, United States District Court, Southern District of New York
SEC OBTAINS ASSET FREEZES WITHIN DAYS OF ALLEGED INSIDER TRADING BY THREE SWISS ENTITIES
The Securities and Exchange Commission announced that, on July 15, 2011, it obtained asset freezes and other emergency relief against three Swiss-based entities it has charged with insider trading. The defendants traded ahead of a July 11 public announcement that Swiss-based Lonza Group Ltd. will acquire Connecticut-based Arch Chemicals, Inc.
According to the Commission’s complaint, which was filed within days of the alleged insider trading, Compania International Financiera S.A., Coudree Capital Gestion S.A., and Chartwell Asset Management Services purchased more than a million common shares of Arch Chemicals between July 5 and July 8, mostly in accounts based in London, England. Immediately after the acquisition announcement on July 11, the firms began selling the recently-purchased shares of Arch Chemicals common stock for millions of dollars in profits. The Commission’s complaint alleges that, at the time the defendants purchased the shares, they are believed to have been in possession of material, non-public information about Lonza’s proposed acquisition of Arch Chemicals.
In filing its complaint in U.S. District Court for the Southern District of New York, the Commission requested emergency relief, noting that because the defendants are foreign entities and placed their trades in overseas accounts, there was a substantial risk that, upon clearance at U.S. brokerage firms, the proceeds of the trades likely would be transferred overseas.
The Honorable P. Kevin Castel, acting as emergency judge, granted the Commission’s requested relief late in the day on July 15. Among other things, the court’s order froze certain assets of the defendants and ordered repatriation of all assets obtained from the trading described in the Commission’s complaint. The court has scheduled a preliminary injunction hearing in this matter for July 28. The case has been assigned to the Honorable Denise L. Cote.
The Commission’s complaint charges the defendants with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. In addition to a preliminary injunction, asset freeze and other equitable relief, the complaint seeks a permanent injunction, disgorgement of illegal trading profits plus prejudgment interest, and civil monetary penalties.