On August 24 U.S. authorities froze the assets of two Spanish traders and charged them with insider trading linked to a multibillion dollar hostile bid by Anglo-Australian mining giant BHP Billiton for Canada's Potash Corp.
Juan Jose Fernandez Garcia, the head of the research arm of Spanish bank Banco Santander advising BHP on its bid, and Luis Martin Caro Sanchez allegedly made nearly$ 1.1 million in "illegal profits" by trading in advance of last weeks public announcement of the multi-billion dollar offer.
Garcia and Sanchez jointly spent a little more than $61,000 to purchase the contracts in U.S. brokerage accounts, according to the Securities and Exchange Commission.
Immediately after BHPs offer was announced publicly on August 17, Garcia and Sanchez sold all of their options for "illicit profits of nearly $1.1 million" the SEC said. "Garcia and Sanchez tried to move off-shore highly suspicious trading profits made just a few days before."
"When abusive market practices occur, as in the case against Garcia and Sanchez, we will act swiftly and decisively to deny wrongdoers the profits of their illegal activity," said Daniel Hawke, chief of the SEC's enforcement divisions market abuse unit.
BHP had made an unsolicited $38.6b billion offer to purchase all of the stock of Potash for $130 per share in cash, SEC said. The acquisition share price represented a 16% premium above Potashs closing price of $112.15 on August 16, it added.
Potash on August 23 formally rejected the bid from BHP, saying it was exploring other offers.
Copyright Agence France-Presse, 2010