7.23.2009 The SEC charged a Kuwaiti trader, Hazem Khalid Al-Braikan, and three related foreign entities—United Gulf Bank, KIPCO Asset Management Company, and Al-Raya Investment Company—for engaging in an illicit scheme through which they reaped millions of dollars in profits when trading around hoax offers to acquire U.S. companies. The SEC alleges that Al-Braikan and the related entities traded around false news of a purported tender offer by a Middle East investment group to acquire Harman International Industries. A phony announcement publicizing the hoax offer was faxed to media outlets on Sunday, July 19, 2009, and subsequently reported on the Internet. Harman’s share price climbed more than 40% in pre-market trading on Monday, July 20. The SEC further alleges that two of the entities similarly traded around a hoax tender offer in April 2009, when a Kuwaiti newspaper reported that a consortium of Middle East companies was offering to purchase Textron, Inc. This offer also turned out to be false. Al-Braikan and the entities amassed positions in securities of a company shortly before a bogus offer was publicized. They then sold their securities at prices inflated by the false information to reap their illicit profits. The SEC filed its charges and obtained the asset freeze within days of the latest hoax offer. The emergency court order freezes more than $5 million in trading profits located in various U.S. accounts.
Click http://www.sec.gov/news/press/2009/2009-169.htm to access the SEC press release.