Reuters: Regulatory News: Traders in Onyx in SEC insider case surface, claim innocence

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Traders in Onyx in SEC insider case surface, claim innocence Jul 24th 2013, 16:00 Wed Jul 24, 2013 12:00pm EDT * Two Dubai traders say call options purchases were lawful * Traders call SEC view "oversimplified and unsophisticated" * Traders want freeze on their profit of $2.53 mln lifted By Jonathan Stempel NEW YORK, July 24 (Reuters) - Two previously unnamed defendants have come forward in a U.S. Securities and Exchange Commission civil lawsuit over alleged insider trading in Onyx Pharmaceuticals Inc while the company was mulling a takeover bid, and said they did nothing wrong. Dhia Jafar and Omar Nabulsi, both of Dubai, said a court-ordered freeze should be lifted on the $2.53 million profit that they made from buying Onyx call options in the last week of June, according to filings late Tuesday in U.S. District Court in Manhattan. The defendants said that when they bought the call options, they had no material, non-public information that biotechnology company Amgen Inc was trying to buy smaller rival Onyx for $10 billion, a hefty premium at the time. Both defendants called themselves frequent options traders who engage in speculative trading. Nabulsi said he had been following Onyx since Jim Cramer, on CNBC's "Mad Money" TV show in early April, said it "may be one of the best new drug companies in the world." () "The SEC's assertion that the trades were 'highly suspicious' based on more general factors such as volume and price history is flawed, and reflects an oversimplified and unsophisticated view of insider trading," Jafar said. The SEC on July 3 filed a lawsuit against unnamed defendants and won asset freezes over Onyx call options trading between June 26 and 28. Onyx on June 30 revealed that it had rejected the unsolicited Amgen bid, and said it would put itself up for sale. Its shares soared more than 51 percent the next day. The rise in the stock resulted in profits of $2.33 million for Jafar and $195,950 for Nabulsi; both men said their activity was lawful. The SEC said suspicious trades in Onyx by all unnamed defendants generated $4.6 million of profit on just $305,000 of investments in just a few days. Call options give investors who expect a share price to rise the right to buy stock at a pre-set price. Options can result in large gains or losses relative to the sums invested. An SEC spokesman was not immediately available for comment. Lawyers for Jafar and Nabulsi did not immediately respond to requests for comment. Both defendants said they had traded in their brokerage accounts at a Dubai branch of Beirut's FFA Private Bank s.a.l., and that the trades may have been routed through an omnibus Citigroup Global Markets account discussed in the SEC complaint. Jafar and Nabulsi said they had no ties to an omnibus Barclays Capital account also referenced by the SEC. The case is SEC v. One or More Unknown Traders in the Securities of Onyx Pharmaceuticals Inc, U.S. District Court, Southern District of New York, No. 13-04645. Link this Share this Digg this Email Reprints

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