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 Onyx said Sunday that it rejected an offer from Amgen Inc. to buy it for $120 per share because it "significantly undervalued" the company. Onyx said it would seek other suitors.
The $120 offer price represented a 38 percent premium to Onyx's closing price on Friday, and the stock spiked more than 50 percent after the rejection was made public.
The SEC said in a complaint filed in the U.S. District Court for the Southern District of New York that certain traders caused a "highly suspicious" spike in the volume of Onyx call options in the three trading days before the buyout offer was made public.
Call options are derivatives that give the holder the right to purchase certain shares at a set price for a certain period of time. In its complaint, the SEC noted that in general, one buys a call option, or call, when a stock price is expected to rise, and sells a call when the stock price is expected to fall.
The complaint alleges that the traders, as a result of their well-timed trades, collectively earned a profit of approximately $4.6 million in just three days, and they had material nonpublic information about the offer at the time they purchased the call options that fueled their gains.
It notes that prior to the three days before the offer was made public, there was little trading in Onyx call options. The regulator said the timing and size of the options trades "were highly suspicious because they constituted large increases over the historical volume for those call options purchased."
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