x Abu Dhabi, UAE Friday 21 July 2017

Court extends Kuwaiti's assets freeze

A US court has extended a temporary freeze on the assets of a Kuwaiti businessman who was found dead two weeks ago.

A US court has extended a temporary freeze on the assets of a Kuwaiti businessman who was found dead two weeks ago after being accused of planting false stories about takeovers of US companies. A US district court judge in New York has granted a revised asset freeze against Hazem Khalid al Braikan, who was found dead in an apparent suicide at his home in Kuwait last month. Mr al Braikan died just days after the US Securities and Exchange Commission (SEC) filed the stock-promotion suit against him but the case is continuing despite his death.

Also named in the asset freeze order were: KAMCO, a Kuwaiti asset management firm; United Gulf Bank, a lender based in Bahrain; and Al Raya Investment, the Kuwaiti firm for which Mr al Braikan was chief executive. KAMCO and United Gulf Bank were alleged to have taken part in the scheme but have since said they acted only as conduits for trades made by clients. The allegations against Mr al Braikan and the financial firms stem from a pair of hoax stories planted about acquisitions of US companies by Gulf investors.

In April, a story appeared in a Kuwaiti newspaper saying a group of companies from the UAE and Kuwait were planning to buy Textron, a publicly traded aircraft and defence conglomerate, for $21 a share, or more than double its price at the time. And last month, a press release was distributed claiming private Saudi investors planned to buy Harman International, a maker of high-end audio equipment, for $49.50 a share when it was trading about $25.

The stories caused the stock prices of Textron and Harman to rise, leading to large profits for Mr al Braikan and the other defendants, the SEC alleged. Both stories turned out to be false. Printing and trading on such false information is illegal in the US. The asset freeze order names accounts held by Mr al Braikan and Al Raya at Citigroup Global Markets and DLJ Pershing, a US investment bank. It also names United Gulf Bank accounts at Citigroup Global Markets and State Street Bank and Trust.

The court ordered that State Street "prohibit the withdrawl, removal, transfer or other disposal of cash totalling US$13.3 million (Dh48.8m), representing the value of proceeds from the transactions in Textron securities and transactions in Harman securities, and options executed on behalf of KAMCO clients". @Email:afitch@thenational.ae