2 Engineers Accused of Buying Stock Before Oil Strike Announced
NEW YORK (AP) _ The Securities and Exchange Commission filed a civil insider trading action Wednesday against two petroleum engineers who allegedly bought stock in a company before public disclosure that it had struck oil in Egypt.
The SEC action filed in U.S. District Court alleged Joseph Kerherve and Adel Adib Riffat made nearly $27,000 in illegal trading profits on Texas International Co. stock.
U.S. District Judge Kevin T. Duffy granted an SEC request for a temporary restraining order, freezing the pair’s assets.
The complaint stated Kerherve, a French citizen living in Cai desert for oil. As part of the contract, test results were to be ″held in strict confidence″ by Schlumberger employees, making them ″temporary insiders,″ barred from trading on confidential information, according to the complaint.
But after Texas International struck oil early in 1985, the engineers ordered their brokers to purchase 10,000 shares each of Texas International common stock, the complaint stated.
The transactions were completed Feb. 4, 1985, less than an hour before Texas International announced the oil strike, said the SEC.
The company’s stock jumped more than 30 percent that day and climbed to $3.25 per share by Feb. 7.
Adib sold his shares on Feb. 7 and made $17,747, said the SEC. Kerherve, who waited a day, made only $9,156 because the stock had dropped to less than $3 a share by then.
The SEC is seeking civil penalties amounting to three times the alleged illegal profits as well as disgorgement of those profits, the complaint said.