Wednesday, September 5, 2007

SEC Insider Trading Investigation Goes International

The SEC's insider trading investigation of questionable options purchases in Placer Dome in October 2005 has taken an international turn as the Commission is seeking authority to interview witnesses in Canada, the U.K., and the Isle of Man.  On October 31, 2005, Barrick Gold Corp. made a hostile offer for Placer Dome, and as happens in so many deals, there was questionable trading in Placer Dome before the announcement.  Both companies are headquartered in Canada, and the SEC recently made a filing in federal court in New York seeking judicial authorization to require witnesses outside the United States to testify in its investigation.  The SEC filed an "unknown traders" suit on November 3, 2005, to freeze the $3 million proceeds of the Placer Dome options trading (see SEC Litigation Release here), and has identified the primary investor in Toronto.  The SEC is now trying to trace who might have been the source of the information. 

While the federal court has subpoena authority to compel witnesses to appear in the U.S., the Commission has to resort to the foreign courts and foreign securities regulators to obtain evidence abroad.  In its filing, the Commission cited an e-mail sent on October 23, 2005, by the Toronto investor who purchased the Placer Dome call options that states, "I hear from the Swiss lads that G is running at PDG. Act accordingly."  "G" is the ticker symbol for Barrick Bold, and "PDG" the symbol for Placer Dome.  There's more than a little smoke coming from that e-mail, which likely means a criminal investigation for insider trading.  A Globe and Mail story (here) discusses the SEC filing. (ph -- with thanks to YH)

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Insider Trading, International, Investigations | Permalink

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