FBI said to be investigating Heinz options trades
CBC News
Posted: Feb 20, 2013 12:50 PM ET
Last Updated: Feb 20, 2013 4:18 PM ET
Traders work at the post that trades H.J. Heinz Co. on the floor of the New York Stock Exchange. A $90,000 options position in Heinz rose to a value of paper of $1.8 million after a takeover bid was announced. (Brendan McDermid/Reuters)
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Both the Wall Street Journal and the New York Times are reporting that the FBI has opened a criminal inquiry into trading related to last week’s $23 billion US takeover of H.J. Heinz Co.
The U.S. Securities and Exchange Commission last week froze assets held in a Swiss bank account after a series of options trades made just before Berkshire Hathaway and 3G Capital announced the proposal.
The news sent the shares soaring by 20 per cent.
Options allow a trader to make a bet on the possibility of a sharp rise in share values and provide a much higher rate of return than buying the actual shares.
The Times, quoting the SEC, says the $90,000 in options were purchased through a Swiss account at New York-based bank Goldman Sachs, and soared to a value on paper of $1.8 million.
Goldman is not accused of any wrongdoing and is cooperating with the SEC.
Heinz shares closed down six cents at $72.14 in New York.
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