US securities regulator yesterday obtained an emergency court order to freeze a Goldman Sachs Swiss trading account and filed a suit against unknown traders over insider trading charges in the proposed $23-billion acquisition of H J Heinz by Warren Buffett and 3G Capital (See: Warren Buffett, 3G Capital to buy HJ Heinz Co for $23 bn).

The suit, filed in the federal court in Manhattan, by the US Securities and Exchange Commission (SEC), says that there were "highly suspicious trading" in Heinz call options on the day prior to the announcement of the deal.

The SEC alleges that prior to any public awareness that Warren Buffett's investment arm, Berkshire Hathaway, and 3G Capital had agreed to acquire Heinz, unknown traders took risky bets that Heinz's stock price would increase. The traders purchased call options the day before the public announcement.

After the announcement, Heinz's stock rose nearly 20 per cent and trading volume increased more than 1,700 per cent from the prior day, enabling these traders to book susbrtantial profits.

According to the SEC, the unknown traders were in possession of material non-public information about the impending acquisition when they purchased out-of-the-money Heinz call options the day before the announcement.

It said that the timing and size of the trades were highly suspicious because the account through which the traders purchased the options had no history of trading Heinz securities in the last six months.

The SEC froze a Zurich-based Goldman Sachs customer account, which made a paper profit of $1.7 million after Heinz stock jumped following the announcement of the acquisition. Freezing the account, the SEC said, will prevent the traders from spending their winnings or moving the money.

The SEC said that it is still investigating the identity of the traders, who channelled their trading through a Goldman Sachs customer account, and referred to them in the suit only as ''unknown traders'' who bought a series of options tied to Heinz's stock.

Several people would be privy to the deal, including bankers, lawyers and executives at Heinz, Berkshire Hathaway and 3G Capital and an investigation would lead to who had leaked details of the deal.

''Irregular and highly suspicious options trading immediately in front of a merger or acquisition announcement is a serious red flag that traders may be improperly acting on confidential nonpublic information,'' said Daniel Hawke, head of the commission's market abuse unit.

Sanjay Wadhwa, senior associate director of the SEC's New York regional office, said, ''Despite the obvious logistical challenges of investigating trades involving offshore accounts, we moved swiftly to locate and freeze the assets of these suspicious traders, who now have to make an appearance in court to explain their trading if they want their assets unfrozen.''

Although the SEC has filed 58 cases last year on insider trading, its biggest conviction was of Rajat Gupta, a former Goldman Sachs board member.