The Securities and Exchange Commission is charging trader Reza Saleh with Texas securities fraud. The agency is accusing the Perot Systems employee of buying call options contracts just two weeks before Dell announced it was acquiring the services company. The SEC says that as a result of insider trading, Saleh made $8.6 million in illegal profits.
Call options allow a buyer to purchase stock at a certain price on a specific day in the future. Right after Dell announced the tender offer on September 21, Reza sold his call options. By this time, Perot Systems’s stock price had gone up by about 65%.
Soon after, the Options Regulatory Surveillance Authority identified Saleh as a suspicious trader. He also allegedly told a Perot Systems director that he bought the options because he knew Dell was going to make the announcement.
Filed in federal court in Dallas, the SEC complaint alleges that Saleh bought 9,332 Perot Systems call options contracts between September 4 and 18, 2009. The call options contracts would expire in October 2009 and January 2010.
The SEC is accusing Saleh of violating the Securities Exchange Act of 1934’s anti-fraud provisions. The SEC wants to place an emergency freeze on Saleh’s assets. It also is seeking a preliminary injunction and a final judgment enjoining the trader from violating relevant provisions of federal securities laws in the future. The agency wants Saleh to pay financial penalties in addition to disgorgement of ill-gotten gains.
Dell announced it was purchasing Perot Systems for $3.9 billion or $30/share in cash. Dell’s tender offer is asking for outstanding Perot Class A common shares. The deal will likely close by the end of January 2010.
Related Web Resources:
SEC: Insider trading charges in Dell deal, CNN, September 24, 2009
SEC Charges Perot Company Employee in $8.6 Million Insider Trading Scheme, SEC.gov, September 23, 2009
Securities Exchange Act of 1934
Our Texas securities fraud lawyers represent victims of stockbroker fraud throughout the state. Contact Shepherd Smith Edwards & Kantas LTD LLP today.