14,200% Return in Three Days: Charges of Insider Trading Follow Amgen's Failed Onyx Buyout
By Hal M. Bundrick
NEW YORK (MainStreet)--Onyx Pharmaceuticals rejected last Sunday's acquisition offer from Amgen, but traders with apparent inside knowledge scored millions before the deal publicly hit the skids, according to the Securities and Exchange Commission.
The SEC says that unknown traders placed a bet that Onyx's stock price would see a bump on news of the potential deal by purchasing call options prior to the announcement. The traders scored $4.6 million in possible illegal profits in just three days, a 14,200% return. The agency took emergency action to freeze the traders' assets before courts closed for the 4th of July holiday.
Onyx's board of directors rejected Amgen's proposal, which represented a 38% premium to Onyx's closing share price on Friday June 28, 2013. The SEC complaint alleges that as a result of the announcement, Onyx's share price increased from a close of $86.82 to a close of $131.33 on Monday July 1, an increase of over 51%, placing the defendants in a position to gain substantial profits. Onyx's trading volume also increased by over 900% from June.The SEC alleges that "certain unknown traders were in possession of material nonpublic information about the offer to acquire Onyx at a substantial premium over the stock price at the time they purchased Onyx call options, many of which were out-of-the-money in the three trading days before the announcement."
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV