SEC settles trading case involving hoaxes, suicide

Thomson Reuters






* Kuwaiti financier committed suicide after being charged

* SEC says hoax news issued on Harman, Textron

* Lawyers for defendants not immediately available

By Jonathan Stempel

NEW YORK, Aug 4 (Reuters) - A U.S. regulator has reached a
$6.5 million settlement of civil insider trading charges
relating to hoax takeover news allegedly issued last year by a
Kuwaiti financier who later committed suicide.

The U.S. Securities and Exchange Commission alleged that
Hazem Al-Braikan, who was chief executive of a company in which
Citigroup Inc held a 10 percent stake, reaped illegal
profits after misleading the public and media about possible
takeover bids for stereo maker Harman International Industries
Inc and corporate jet builder Textron Inc .

The commission said Al-Braikan traded in accounts held in
his own name, in his company Al Raya Investment Co, and for
himself and others at the Kuwaiti brokerage Kipco Asset
Management Co. Citigroup held a 10 percent stake in Al-Raya.

Al-Braikan was found dead of a gunshot wound to the head on
July 26, 2009, three days after being sued by the SEC, in what
Kuwaiti police called a suicide. [ID:nLQ671358] He was 37.

The SEC on Wednesday said the settlement calls for
Al-Braikan's estate to give up $2.58 million of illegal
profits, including $1.69 million by Al-Braikan and $894,000 by
a person he tipped about Harman.

It also calls for Al-Raya to give up $1.21 million of
illegal profit and pay a $300,000 fine, and for Kipco to give
up $2.44 million on behalf of some of its clients.

The SEC said it has dismissed United Gulf Bank as a defendant.

According to the regulator, Al-Braikan had in April 2009
contacted media outlets about an alleged "scoop" regarding a
Middle Eastern company's upcoming takeover bid for Textron.

Three months later, according to the SEC, Al-Braikan faxed
and e-mailed to several media a fake release that a nonexistent
Saudi Arabian investment group planned to acquire Harman, and
made more than 70 phone calls to promote the bogus news.

The SEC said Al-Braikan bought large amounts of stock in
both companies before distributing the fake news, and sold his
positions once the stock prices had become inflated.

Prior to his death, Al-Braikan was considered a respected
figure in Kuwaiti money management, and was a familiar figure
at high-level financial functions. [ID:nN23397991]

Lawyers for Al-Braikan's estate, Al-Raya and Kipco did not
immediately return calls seeking comment. The SEC also did not
immediately return a call. A Citigroup spokeswoman had no
immediate comment.

The case is SEC v. Al-Raya Investment Co et al, U.S.
District Court, Southern District of New York, No. 09-06533.
(Reporting by Jonathan Stempel in New York; Editing by Sofina
Mirza-Reid