Enter multiple symbols separated by commas

SEC Alleges Insider Trading in TXU Deal

Federal regulators on Friday charged that unknown individuals illegally profited from advance knowledge of the proposed $32 billion buyout of electric utility TXU using foreign brokerage firms for the transactions to conceal their identities.

The Securities and Exchange Commission filed a civil lawsuit in federal court in Chicago alleging illegal insider trading in connection with what would be the largest private buyout in U.S. history. "Highly profitable and suspicious" purchases of options on TXU stock on the Chicago Board Options Exchange occurred last month prior to the Feb. 26 announcement that the company had signed a deal with private equity firms, the SEC said.

The agency said it could not yet identify those involved because they purchased the options through foreign brokerage firms, which then cleared the trades through U.S. brokerages that executed them on the Chicago exchange.

The unknown defendants "are in a position" to reap more than $5.3 million in profits from their subsequent sales, the SEC said. TXU stock jumped more than 13% on the day of the announcement.

The SEC is seeking unspecified restitution of trading profits and civil fines against the defendants.

Contact U.S. News


    Get the best of CNBC in your inbox

    Please choose a subscription

    Please enter a valid email address
    To learn more about how we use your information,
    please read our Privacy Policy.

Don't Miss

U.S. Video

  • Leap Second

    Are you prepared for time to stand still? That's about to happen at midnight tonight.

  • Puerto Rico faces historic $72B default

    Puerto Rico's governor wants Congress to allow the island to pull out of its debt load by declaring Chapter 9 bankruptcy, much like Detroit, reports CNBC's Kate Kelly with the details.

  • What is an alternative investment?

    In this Straight Talk video, FA Council member Rich Coppa, managing director of Wealth Health, explains that investors should weigh the risks and rewards of alternatives before allocating funds.