The FBI and Securties and Exchange Commission are investigating illegal trading of Heinz (HNZ) stock, red flagged by a large purchase on 2/13/13 from a dormant Swiss account just one day before Heinz was bought by Warren Buffet’s Berkshire Hathaway (BRK.A) and 3G Capital. This acquistion was a $28 billion deal, which increased Heinz’s stock value by 20% in one day.
A giveaway of the potential fraud was that the dormant account hadn’t traded Heinz stock in over six months, which leads the SEC to believe that traders had insider information prior to the sale. The SEC has frozen then $1.7 million dollar profit in the Zurich based account, and it will remain frozen until the traders can explain in court why they bought these stocks when they did.
This is the second time in six months that 3G has been involved in an SEC suit. The first was a freeze on assets of a Wells Fargo & Co. stockbroker who allegedly traded on inside information about 3G’s acquisition of Burger King in 2010. It is also the second time in two years that Berkshire has been targeted by the SEC.
The SEC is currently working to identify who the traders were, have them repay their profits with interest, pay penalties, and be barred from future violations permanently.