The Step Before ABN Takeover

ABN Amro Holding NV, the target of the biggest banking takeover, said the New York Stock Exchange is examining trading in the company's shares before Barclays Plc made its offer four months ago.

The inquiry is being conducted as part of the NYSE's policy to ``investigate market activity around corporate announcements,'' said Neil Moorhouse, a spokesman for Amsterdam- based ABN Amro, the biggest Dutch bank. ``We are fully cooperating with the NYSE,'' he said, without being more specific.

Barclays, Britain's third-largest bank, and a group led by Royal Bank of Scotland Group Plc have made competing offers of more than 63 billion euros ($87 billion) for ABN Amro. Regulators around the world have stepped up investigations into stock trading during a record year for mergers and acquisitions.

``Insider trading does probably happen but it's difficult to prove,'' said Gert-Jaap Kraan, an Amsterdam-based analyst at Theodoor Gilissen Bankiers NV. ``Now there is so much merger and acquisitions activity, the market also trades a lot on rumors.''

The NYSE is reviewing trades in ABN Amro's American depositary receipts before Barclays and ABN Amro announced March 19 they were in talks, said a person familiar with the probe who declined to be named because the review hasn't been made public. Robert Bakker, a spokesman for NYSE Euronext in Amsterdam, declined to comment.

Share Trading

Almost 2.7 million ADRs of ABN Amro changed hands on March 12, a week before the company disclosed its talks with Barclays, according to data compiled by Bloomberg. That was almost four times the daily average in the first quarter.

The NYSE is the third securities regulator probing trades in ABN. The U.K.'s Financial Services Authority is looking at share purchases in the days preceding the announcement of Royal Bank's rival bid, the Wall Street Journal reported in May. The Dutch financial markets authority is also conducting an inquiry into ABN trading, the newspaper reported today.

Barclays fell 1.7 percent to 708 pence at 3:49 p.m. in London, while Royal Bank's stock dropped 1.5 percent to 633 pence. Shares of ABN Amro declined 0.7 percent to 34.42 euros in Amsterdam.

Insider trading in the U.S. may have taken place in 41 percent of takeovers valued at more than $1 billion during the year ended August 2006, according to data compiled by Measuredmarkets Inc., a Toronto-based consulting firm. The U.S. Securities and Exchange Commission has filed at least 22 insider- trading lawsuits in 2007.

Suspicious Trades

The SEC sued a Hong Kong couple May 8, claiming they traded on inside information about News Corp.'s $5 billion offer for Dow Jones & Co. The agency also is probing trading in shares of companies including TXU Corp. that have received buyout offers.

Suspicious trades may have occurred before 24 percent of British takeover announcements in 2005, according to a March 7 report by the U.K.'s Financial Services Authority.

Dutch shareholder group VEB said on May 16 that it asked prosecutors to investigate whether ABN Amro leaked price- sensitive information to the media. VEB said it had evidence that ABN Amro passed on information about plans for Royal Bank's counteroffer. ABN Amro said at the time that it complied with the law on sharing price-sensitive information.

Numico Probe

The Dutch securities regulator AFM said today it started an investigation into possible insider trading in Royal Numico NV shares. The stock of Schiphol, Netherlands-based Numico yesterday rose as much as 13 percent before trading was suspended on Euronext Amsterdam. After trading closed, Paris-based Groupe Danone SA said it agreed to buy Numico for 12.3 billion euros.

``We started an investigation because of the share price development and the trading volume, which was significantly different from the usual levels,'' AFM spokeswoman Alice Jentink said in an interview.

Separately, the Dutch Supreme Court today said it will decide on July 13 whether ABN Amro can proceed with the $21 billion sale of its Chicago-based LaSalle Bank unit to Bank of America Corp., the second-biggest U.S. bank, without approval from shareholders. The Royal Bank group has said its bid for ABN Amro depends on winning LaSalle.

source:bloombegr.com