By Alex Nixon From Trib Live

The investigation of insider trading before the $28 billion buyout of H.J. Heinz Co., a 7-month-old examination that started with a Swiss trading account, has led to a Cayman Islands company.

The connections to Switzerland and the Cayman Islands, two countries known as havens for individuals and companies that want secrecy in their financial dealings, underscore the complexity U.S. investigators may face in solving the case.

The Securities and Exchange Commission served Alpine Swift Ltd. with a summons last month as the agency explores who tried to profit from advance knowledge of the sale of the Pittsburgh ketchup maker.

The development, the first since the case was opened in February, came to light Thursday during a court hearing in New York. So far, government investigators have not named a person as a suspect. But they said the trades were made from a Goldman Sachs account in Zurich.

“They’re peeling back the layers of a onion, only they don’t know how many layers there are,” said Peter Henning, a professor of law at Wayne State University in Detroit and a former fraud investigator for the SEC and the Justice Department.

Little is known about Alpine Swift, which has offices in two locations in the Cayman Islands. An attorney representing the company, Juan Morillo, appeared in federal court in New York to deny that his client was involved, according to a Reuters news service report.

Attempts by the Tribune-Review to reach Morillo were unsuccessful. He did not return emails, and his office phone went unanswered.

Henning said SEC investigators should be commended for getting this far, but it’s difficult to predict if they’ll ever find a person to take action against. The Cayman Islands are a favorite place to establish shell corporations because of the secrecy of the country’s banking and corporation laws, he said.

The SEC, which sued “certain unknown traders” and won a court order freezing a Swiss trading account from which suspicious Heinz trades originated, declined to comment.

Details about the government’s case against Alpine Swift were not known because the complaint was not filed with the federal court in New York. The only documents available in court records were two proofs that Alpine Swift was served with legal papers.

The SEC alleges that a Goldman Sachs account in Zurich was used to buy an unusually large number of options for Heinz stock on the day before the deal was announced on Feb. 14. The traders stood to pocket $1.7 million on the transaction, but a federal judge froze the options before they could be exercised, and they expired in June.

Warren Buffett’s Berkshire Hathaway and 3G Capital, a Brazilian investment firm, completed their acquisition of Heinz in June.

Banking secrecy laws in Switzerland protected the identity of the trader in Zurich. Finma, the Swiss equivalent of the SEC, said it was cooperating with the SEC.

On Friday, a spokesman declined to say if Alpine Swift was connected to the Goldman Sachs account or if the agency provided the SEC with information about the Cayman Islands company.

The Finma spokesman, Vinzenz Mathys, said Alpine Swift was not registered in Switzerland and was not regulated by the agency.

Goldman Sachs spokeswoman Andrea Raphael declined to comment.

The SEC has stepped up enforcement of insider trading in recent years. It considers the violations “a high priority,” and last year brought 58 actions against 131 individuals and companies, the commission has said.

And it’s scored some high-profile victories, including the conviction of hedge fund titan Raj Rajaratnam in 2011. The Galleon Group founder, who made more than $50 million on a series of illegal trades, was brought down when the SEC began turning his network of Wall Street sources into informants and using wiretaps.

But the Heinz case appears to point to a complex and sophisticated attempt to hide the identities of the person or people behind the insider trading, Henning said.

“You don’t pick out two of the most famous offshore secrecy areas unless you have a plan,” Henning said, referring to Switzerland and the Cayman Islands. “You don’t go to this much effort for a one-time trade. You don’t set up this much secrecy unless you have a very big secret.”

Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or [email protected].

For more on this story go to:

http://triblive.com/news/editorspicks/4700877-74/heinz-sec-islands#axzz2esCEqWxE