The U.S. Securities and Exchange Commission has frozen the assets of a Swiss trading account that allegedly made a series of "highly suspicious" trades reaping about $1.7 million ahead of the blockbuster sale of H.J. Heinz Co.
The regulator's move came one day after Heinz said it was selling itself for $23 billion to Warren Buffett's Berkshire Hathaway Inc. and Brazilian private-equity firm 3G Capital in one of the biggest food-industry acquisitions ever.
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In a lawsuit filed in Manhattan federal court on Friday, the SEC said the traders invested nearly $90,000 in options that would gain in value if Heinz's share price rose. A day later, after the deal was announced, the traders stood to reap a profit of more than $1.7 million, the lawsuit said.
Regulators began an inquiry into possible insider trading very shortly after the deal was announced, alerted by a spike in options trading the day before, according to people close to the investigation.
Heinz shares jumped $12.02 to close at the offer price of $72.50 in trading on Thursday after the deal was made public. Before that, the stock had traded at about $60 or below since November 2012, the SEC said�price levels at which the options involved in the trading now under scrutiny would be valueless.
The stock ended 4 p.m. composite trading Friday at $72.28 on the New York Stock Exchange.
The SEC said the timing and size of the trades were highly suspicious given the account had no history of trading in Heinz securities in the last six months. Trading in Heinz's options in the several days ahead of the deal's announcement was minimal as well, the SEC said.
SEC investigators don't yet know the number or identity of the traders involved in the suspicious trading.
"Despite the obvious logistical challenges of investigating trades involving offshore accounts, we moved swiftly to locate and freeze the assets of these suspicious traders, who now have to make an appearance in court to explain their trading if they want their assets unfrozen," said Sanjay Wadhwa, senior associate director of the SEC's New York Regional Office.
Heinz and the investor group weren't accused of any wrongdoing. A spokesman for the investor group, which includes 3G Capital, declined to comment Friday. Berkshire Hathaway and Heinz didn't immediately return phone calls seeking comment.
The trades were done through an account at GS Bank in Zurich, a unit of Goldman Sachs Group Inc. Goldman wasn't accused of any wrongdoing. "We're cooperating with the SEC's investigation," a Goldman Sachs spokeswoman said Friday.
The SEC investigators conducting the inquiry are the same team investigating suspicious trading linked to another 3G Capital deal, the 2010 purchase of Burger King, said a person close to the investigation.
The SEC in September 2012 took emergency action to freeze the assets of a stockbroker the agency alleged had exploited a tip from a 3G Capital investor to trade ahead of the private-equity firm's purchase of the burger chain.
The Heinz enforcement action is one of the fastest ever filed by the agency, according to officials. The SEC typically files only one or two emergency actions every year, usually to prevent the risk that profits from suspicious trading will vanish offshore.
"If we didn't act [to freeze assets] and ended up proving a case of insider trading but the money had gone, it would be a pyrrhic victory," Daniel Hawke, chief of the SEC's market abuse enforcement unit, said in a telephone interview.
Write to Chad Bray at chad.bray@wsj.com
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