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SEC revives insider trading suit over Onyx shares

A sign for the Securities and Exchange Commission (SEC) is pictured in the foyer of the Fort Worth Regional Office in Fort Worth, Texas June 28, 2012. REUTERS/Mike Stone

By Aruna Viswanatha

(Reuters) - U.S. securities regulators have filed a new lawsuit accusing two Dubai residents of illegally trading in Onyx Pharmaceuticals Inc stock based on inside information, one month after a federal judge dismissed an earlier version of the lawsuit.

The two defendants amassed "large, speculative and highly leveraged" positions in both Onyx and Life Technologies Corp that earned them profits of $3.7 million, the Securities and Exchange Commission said in a new lawsuit filed on Friday.

A Manhattan federal judge dismissed an earlier lawsuit against the defendants, Dhia Jafar and Omar Nabulsi, and said the SEC had not provided enough information to infer that the pair had traded based on nonpublic tips.

But U.S. District Judge Paul Oetken said he would keep the accounts that held the trading profits frozen for 30 days, and allowed the SEC some extra time to file an amended complaint.

In the new lawsuit, the SEC added allegations involving trading in Life Technologies, and provided additional details about the trading.

Jafar and Nabulsi amassed the positions in each stock as short term call options, among other financial instruments, the SEC said.

Hours after they purchased the options, articles in Canada's Financial Post newspaper revealed confidential information about pending deals related to the two companies, the SEC said.

The pair traded in Life Technologies last January, and in Onyx in June, the SEC said.

Jafar and Nabulsi's trading in Life and Onyx came as the two companies were assessing takeover interest or considering a bid, according to the SEC's allegations.

Thermo Fisher Scientific, Inc. agreed to acquire Life Technologies in April, and Amgen, Inc. announced it was acquiring Onyx in August.

A lawyer for Jafar and Nabulsi, Patrick Smith of DLA Piper, did not immediately respond to a request for comment on the new lawsuit.

The case is SEC v. Dhia Jafar a/k/a Dhia Jaffar and Omar Naulsi, U.S. District Court, Southern District of New York, No. 13-04645.

(Reporting by Aruna Viswanatha; Editing by David Gregorio)