SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16878 / January 31, 2001
Securities and Exchange Commission v. Midpoint Trading Corp. and One or More Unknown Traders of Options on Common Stock of Ralston Purina Co., 01 Civ. 0339 (JSM) (S.D.N.Y.)
SEC Obtains Preliminary Injunction in Nestlé-Ralston Purina Insider Trading Case
The Securities and Exchange Commission today announced that the U.S. District Court for the Southern District of New York entered a preliminary injunction on January 26, 2001 in the Commission's case alleging insider trading in Ralston Purina securities before the January 16, 2001 announcement that Nestlé S.A. would acquire Ralston Purina. The preliminary injunction freezes the assets of Midpoint Trading Corporation and unknown traders in Ralston Purina stock and options. The total potential dollar amount of assets currently frozen by the preliminary injunction exceeds $2 million. Unless modified by the Court, the preliminary injunction will remain in place indefinitely throughout the pendency of the case. No defendants have yet come forward to respond to the Commission's allegations.
The Commission's case alleges that highly profitable trades in Ralston Purina stock and options were made anonymously by foreign entities, including through Swiss bank accounts, beginning just before confidential merger discussions began between Ralston Purina and giant Swiss food company Nestlé S.A. The Commission charges Midpoint Trading and the unknown defendants with violating two antifraud provisions of the federal securities laws, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. As relief, the Commission seeks a permanent prohibitory injunction, the disgorgement of all illegal profits, and the imposition of civil monetary penalties.
The Commission's investigation is continuing.
The Commission acknowledges the assistance of the New York Stock Exchange, and the continuing assistance of the Chicago Board Options Exchange, in this matter.