An undisclosed number of individuals allegedly traded ahead of Nestlé’s public announcement of its US$10bn Ralston Purina buyout on 16 January, and they are now facing prosecution from the Securities and Exchange Commission.


Shortly after discussions over a proposed merger began in November, the traders used Swiss bank accounts to buy up the “highly profitable” call options on Ralston’s shares.


The SEC filed a suit at the Manhattan federal court yesterday (17 January) commenting, “defendants have already made substantial windfall profits from their illegal trading and, unless enjoined, will be able to continue to do so.”