Warren Buffet is well-known for his revered billionaire empire, but on Friday, the Securities Exchange Commission, SEC, announced they are investigating Buffet's Berkshire Hathaway and 3G Capital's acquisition of H.J. Heinz Co. for $23.3 billion, Reuters reported.
The "unknown" traders who made purchases on Feb. 15, before the acquisition was announced, expected to gain $1.7 million. Now the question remains, was this an insider trading or purely good investment?
The SEC acted immediately and filed a federal complaint, allegedly stating the insiders involved "are either foreign traders or traders trading through foreign accounts" in Zurich, Switzerland, according to CNN Money.
They subsequently received a court order to freeze the assets in a Swiss account, that suspiciously had no other transactions or acquisitions with Heinz in the past six months until Feb. 15, reported Examiner.
"Irregular and highly suspicious options trading immediately in front of a merger or acquisition announcement is a serious red flag that traders may be improperly acting on confidential nonpublic information," the SEC's Daniel Hawke said in a statement, reported the Examiner.
Heinz is renowned for its ketchup and other food products. Buffet is regarded a valued investor, boosting investments into businesses he thinks is headed in the right direction. According to Bloomberg Businessweek, Heinz fans shouldn't worry about how the company will be managed in the future, for instance a board of directors is not going to come in and make sweeping changes because Heinz will be operating much like a private entity.
Some of the changing matters however will be the role of Heinz Chief Executive Officer Bill Johnson, who will not have a say in future acquisitions of the company. Bloomberg reported Johnson could expect about $100 million for Heinz' buyout.
The SEC's insider trading investigation is the second lawsuit for Brazil's 3G Capital in six months, according to Reuters. If you want to delve deep into Buffet's mind, here's an interview he had with Charlie Rose from Bloomber Businessweek.
