(Reuters) - A U.S. market regulator is for now dropping insider trading cases against three Swiss asset managers, despite accusations that two of the defendants improperly thwarted its investigation, including by throwing out a BlackBerry.
By Jonathan Stempel
In papers filed in U.S. District Court in Manhattan, the U.S. Securities and Exchange Commission said Compania Internacional Financiera SA and Coudree Capital Gestion SA had "repeatedly failed" to cooperate in providing evidence.
The agency wants to end the cases but is seeking permission to pursue them if new information comes to light, according to the court papers filed late Friday.
Separately, the SEC said it will dismiss its claims against the third defendant, Chartwell Asset Management Services. All of the dismissals require court approval.
The SEC had accused the defendants of improperly reaping millions of dollars in buying 1.04 million shares of Arch Chemicals Inc before the Norwalk, Connecticut-based company agreed to a $1.2 billion buyout on July 11, 2011.
Arch shares rose 21.4 percent in the week before Switzerland's Lonza Group AG <LONN.VX> agreed to buy Arch for $47.20 per share, a 12 percent premium. The defendants then began selling their Arch shares, the SEC had alleged. Lonza completed the purchase in October.
According to the SEC, Yomi Rodrig, a Turkish national who controls Compania and Coudree, discarded his BlackBerry last August 11 even as his firms were responding to SEC document requests.
"Rodrig's BlackBerry may have contained text messages regarding his trading in Arch as well as his 'contact list' -- all of which constitutes relevant and discoverable evidence now likely impossible to recover," SEC lawyer Rua Kelly wrote.
Compania and Coudree have said previously their trades were legitimate.
The SEC said in the court papers that the two companies' failure to cooperate, and the difficulty of gathering evidence, give it "good cause" to dismiss its case against them for now.
"Many of the relevant documents and witnesses are located in foreign jurisdictions," SEC spokesman John Nester said. "The dismissal without prejudice will allow us to continue our investigation without the limitation of a court deadline."
Ira Lee Sorkin, a lawyer representing Compania and Coudree, declined to comment on the SEC request. He said he plans to file papers in the case on Tuesday.
Compania and Rodrig in 2005 agreed to pay $6.32 million to settle an SEC lawsuit accusing them of violating rules to bar short sales of stock just before that stock begins trading. Neither admitted wrongdoing.
In seeking to end its case against Chartwell, the SEC also agreed to lift an asset freeze imposed last July, Chartwell said. Compania's and Coudree's assets had also been frozen.
"Chartwell did nothing wrong," managing director Vincent de Canniere said in a statement.
The case is SEC v. Compania Internacional Financiera SA et al, U.S. District Court, Southern District of New York, No. 11-04904.
(Reporting By Jonathan Stempel; Editing by Bernard Orr and Tim Dobbyn)