US regulators have accused unknown investors of “highly profitable and suspicious” dealing in Global Industries, a US oil and gas services company, ahead of a $1.1bn takeover by a French rival.
The deal was hailed as the biggest deal of the decade for Technip of France, bringing together Europe’s second-biggest oil services company and Louisiana-based Global.
However, the Securities and Exchange Commission has said inside information was used by unknown parties to profit two days before the takeover was announced.
A New York court has frozen assets related to the trading, conducted through Austria’s Raiffeisen Bank International and Brown Brothers Harriman, the US investment bank and securities firm. The court is also demanding that the buyers identify themselves and has prohibited them from destroying documents.
The SEC alleges that on September 8 and 9, investors bought 685,840 shares in Global at prices ranging from $5.14 to $5.39 a share.
Three days later, Technip and Global announced an agreed takeover that sent the shares up to $7.77. This was just below the $8 offer price, a 55 per cent premium to the closing price before the announcement.
The shares purchased by the unknown investors were then sold on September 12 for a profit of $1.7m.
In its complaint to the New York court, the SEC said it believed that the investors were “in possession of material, non-public information about Technip’s intent to acquire Global and traded on the basis of such information”.
The SEC alleges that the proceeds of the dealing are held by Brown Brothers Harriman. It warns that unless the assets are frozen, the investors could “continue to engage” in similar acts. Raiffeisen Bank said it had not made purchases on its own account, but through an “omnibus account” held at Brown Brothers Harriman, where the transactions of several parties may be settled.
“The orders were placed by a counterparty of Raiffeisen Bank International and routed through the execution desk automatically without any indication of being unusual,” the bank said on Tuesday.
Raiffeisen is a subsidiary of Raiffeisen Zentralbank, the co-operative banking group, and operates subsidiaries in 15 countries in central and eastern Europe.
Brown Brothers Harriman operates in North America, Europe and Asia and has more than $2.8bn under management. Technip declined to comment. Brown Brothers Harriman and Global were also unavailable for comment.
Paris-headquartered Technip has said the acquisition of Global will help it to boost its underwater energy business. The deal, which includes $136m of net debt, will almost double the size of its fleet of ships.
Additional reporting by Sheila McNulty in Houston and Kara Scannell in New York
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