SEC Raps Anonymous Purchasers of Nutrients Manufacturer’s Stock Over Insider Trading

Jack Humphrey, Regulatory journalist
December 23, 2010 /

The Securities and Exchange Commission (SEC) has filed a lawsuit charging the anonymous purchasers of Columbia-based nutrients manufacturer Martek Biosciences Corporation for allegedly employing an insider trade to acquire information about the buyout of Royal DSM NV with Martek.

Martek Biosciences Corporation announced December 21 that it has approved the proposed buyout worth approximately $1.1 million from one of the largest suppliers of vitamins in the world, Netherlands-based Royal DSM NV, which would still require the approval of all the shareholders and regulators and expected to close in the next six months.

In its insider trade complaint, the SEC claimed that the anonymous buyers bought 2,615 call options from Martek stock starting December 10 to December 15 using an unknown UBS AG. On December 21 when the acquisition was confirmed, the SEC added, the anonymous purchasers resold the Martek stock.

The SEC said that the insider trade has put the anonymous purchasers in the position to gain nearly $1.2 million in ill-gotten profit from the sale of call options.

According to the commission, Royal DSM NV would pay $1 billion, which accounts for $31.50 per share, for all outstanding Martek common stock. The figure is a 35 percent premium above the one in the closing of the previous day.

The SEC said available information on the acquisition of Martek Corp. was not made public before the buyout took place, so the incident could involve an insider trade.

The anonymous purchasers will be banned from buying any stock in the future in addition to monetary penalties for the insider trade.

 

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