NEW YORK – Kuwaiti asset manager Al-Raya Investment Co. and the estate of its former chief, who was found dead days after U.S. regulators accused him of profiting from bogus takeover offers, agreed to pay $3.2 million to resolve the case.
The Securities and Exchange Commission also will collect $3.3 million from accounts belonging to other unidentified investors who allegedly reaped gains on the fake offers for Textron Inc. and Harman International Industries Inc. last year, according to documents the SEC delivered Wednesday to federal court in Manhattan. The accord requires a judge’s approval.
Hazem al-Braikan died in an apparent suicide in July 2009, the Kuwaiti Interior Ministry said at the time, after the SEC linked him to “highly profitable and suspicious” trades before the appearance of Internet and media reports that investor groups planned to buy Textron and Harman. His estate and Al-Raya settled without admitting or denying misconduct, the documents show.
John Kiernan, a New York attorney for Al-Raya, and Julie Smith, a Washington lawyer for al-Braikan’s heirs, couldn’t be reached for comment. The SEC agreed to drop fraud claims against other firms it previously linked to the trades.
Since bringing the case, investigators found that al- Braikan used his office computer to create a fake press release for the Harman bid, incorporating the “APG” logo of a French car-parts manufacturer to represent a buyer he called the Arabian Peninsula Group, according to an amended SEC complaint.
The SEC said al-Braikan sent the release to outlets including the Associated Press, Dow Jones Newswires and Bloomberg News. He also made more than 70 phone calls to publications such as the New York Times and the Washington Post.
Though few media outlets reported on the press release, shares of Stamford, Conn.-based Harman, the maker of Harman Kardon audio systems for homes and vehicles, jumped as much as 10 percent on July 20, 2009, before the company said it wasn’t aware of any takeover offer.
Three months earlier, al-Braikan had also “relayed rumors,” contacted publications and set up trades before a bogus report about a bid for Textron appeared in Kuwait’s Al-Watan newspaper, the SEC said. Shares of the Providence-based maker of Cessna aircraft and Bell helicopters surged the most in 28 years.
