Judge reverses ‘insider’ case payout settlement

Asa Fitch

• Last Updated: November 21. 2009 8:21PM UAE / November 21. 2009 4:21PM GMT

A judge in the US has reversed a US$875,000 (Dh3.2 million) settlement in an alleged insider trading case brought in July against an Al Ain resident.

The US Securities and Exchange Commission (SEC) initially said on Thursday that it reached a deal to settle the case against Khaled Mohammed Sharif al Sayed al Hashemi of Al Ain, levying a penalty of $406,620, plus $458,760 in profits and $9,620 in interest charges.

Under the deal, Mr al Hashemi did not admit or deny the SEC’s allegation that he profited illegally by trading in the shares of a Canadian petrochemicals firm ahead of its acquisition by the International Petroleum Investment Company (IPIC) of Abu Dhabi.

Profiting from trades based on information about deals before they are publicly disclosed is illegal in the US and in most other countries, including the UAE.

New York district court judge, Harold Baer, approved the settlement on Thursday but then rejected it the next day, saying he was seeking additional information.

The complaint alleges Mr al Hashemi learnt of talks between Nova Chemicals and IPIC in late January and early February. He liquidated most of the holdings in his brokerage account in the US and wired an extra $100,000 to buy thousands more Nova shares and stock options, court documents say.

The SEC found the transactions suspicious because they came just before the IPIC acquisition and because Mr al Hashemi held a portfolio consisting mainly of technology shares and hadn’t traded in Nova stock before.

Nova shares soared by 289 per cent after the deal was announced, resulting in large profits for Mr al Hashemi, according to account statements filed as part of the case.

afitch@thenational.ae