SEC sues over 'false takeover' profits

24 July 2009

Securities regulators in the US have filed a lawsuit against a Kuwaiti businessman who is alleged to have made millions of dollars by profiting from bogus takeover rumors involving two US companies.

The Securities and Exchange Commission (SEC) has sued Hazem Khalid al-Braikan, the chief executive of Al Raya Investment Company - which is partly owned by Citigroup - as well as a number of related entities.

A court order freezing more than $5 million in trading profits has been obtained by the SEC, which alleges that the money was made after hoax offers were made for Harman International Industries and Textron.

Shares in the Harman International rose on Monday after media outlets received a false notification that an offer had been submitted to purchase the firm.

"Harman International's share price ... climbed more than 40 percent in pre-market trading." the SEC said, adding that the price closed at $20.80 on Monday after the company rejected the claim.

According to the Financial Times, the SEC has previously been criticized for not acting fast enough following suspicious trading activity.

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