Regulator Scrutinizes Trades Before Anadarko Deal Announcement
April 29 2019 - 6:14PM
Dow Jones News
By Micah Maidenberg
Traders used insider information to turn a profit of about $2.5
million related to the sale of Anadarko Petroleum Corp., according
to the Securities and Exchange Commission on Monday.
The trader or group of traders who executed the transactions are
currently unknown to the SEC. However, the agency said it had
obtained a court order to freeze assets related to the alleged
trading based on nonpublic information tied to Chevron's proposed
$33 billion merger with Anadarko and Occidental Petroleum Corp.'s
$38 billion offer for the company.
Between February 8 and April 1, the traders purchased 1,650 call
options, which gave the trader or group of traders the right to buy
Anadarko shares at a set price for a certain period, according to a
lawsuit the SEC filed in federal court in New York.
Chevron delivered its offer to Anadarko on February 6, the SEC
said in the lawsuit. Anadarko was also in discussions, starting in
March, with Occidental Petroleum Corp., which offered last week to
acquire Anadarko for about $38 billion.
Media representatives for Anadarko and Occidental didn't respond
to requests for comment. A Chevron spokesman declined to comment.
The oil companies aren't named as defendants in the SEC's suit.
The judge overseeing the case signed off on an order freezing
assets related to the trades, according to court records.
In two brokerage accounts, the unknown traders purchased equity
call options in Anadarko shares.
For example, in one account, a trader bought 650 call options in
Anadarko shares on April 1 for about $70,000. Those options allowed
the owner to acquire the oil company's shares for $50 a share,
according to the SEC. That same day, leaders at Occidental and
Anadarko were scheduled to meet.
On April 12, the news that Chevron would acquire Anadarko became
public. Shares of Anadarko closed at $61.78 that day, up roughly
32% from the previous day.
Three days later, the owner of the call options bought on April
1 exercised them, giving the trader the right to buy 65,000
Anadarko shares at the lower price, according to the SEC, allowing
the holder of the options to earn a profit of $727,350, less
commissions.
On Monday, shares of Anadarko closed at $72.93 after the company
said it would resume talks with Occidental.
Write to Micah Maidenberg at micah.maidenberg@wsj.com
(END) Dow Jones Newswires
April 29, 2019 17:59 ET (21:59 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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