WHITE PLAINS, N.Y. (CN) – A Kuwaiti businessman made $5 million by buying shares in U.S. companies just before bogus reports of tender offers drove up prices, then selling out before the reports were disclosed as false, the SEC claims in Federal Court.
Hazem Khalid Al-Braikan aggressively bought $3.6 million worth of stock in electronics company Harman International Industries in the four days before an online announcement that a private Saudi Arabian investment group would acquire Harman for nearly twice its share price.
Shares in the company jumped from $25.18 to the mid-$30s, then crashed to $20.86 when Harman denied the report.
Al-Braikan made $1.15 million in that day of trading, and companies with which he is affiliated made about $2.3 million, the SEC says.
Two of the companies, Al-Raya Investment and Kipco Asset Management, profited after a similar day of tumultuous trading in Textron, according to the complaint.
The trading attracted the SEC’s suspicion because Al-Braikan bought shares on margin. Margin trading can be highly profitable if share prices increase, but disastrous if they dip.
Al-Braikin and the three corporations he used in the trading scheme, Al-Raya, Kipco and the United Gulf Bank of Kuwait, all liquidated their interest in the companies and asked to have their proceeds wired to them.