* Two Dubai traders say call options purchases were lawful
* Trader calls SEC view "oversimplified and unsophisticated"
* Traders want freeze on their $2.53 mln profit lifted
By Jonathan Stempel
NEW YORK, July 24 (Reuters) - Two previously unnamed defendants have come forward in a U.S. Securities and Exchange Commission civil lawsuit over alleged insider trading in Onyx Pharmaceuticals Inc while the company was mulling a takeover bid, and said they did nothing wrong.
Dhia Jafar and Omar Nabulsi said the lawsuit should be dismissed, and a court-ordered freeze should be lifted on the $2.53 million profit that they made lawfully from buying Onyx call options in the last week of June, according to filings late Tuesday in U.S. District Court in Manhattan.
The defendants, both from Dubai, said that when they bought the call options, they had no material, non-public information that biotechnology company Amgen Inc was trying to buy its smaller rival for $10 billion, a hefty premium at the time.
"Unlike in other insider trading cases, my clients have stepped forward to identify themselves," said Patrick Smith, a DLA Piper partner who co-chairs the firm's white collar practice group and represents Jafar and Nabulsi. "They have nothing to hide. They were never in possession of material non-public information, and the SEC can never prove that they were."
SEC spokesman Kevin Callahan declined to comment. The regulator has until Aug. 7 to file a response.
On July 3, the SEC filed an insider trading lawsuit and won an asset freeze against an unspecified number of defendants who it said traded in Onyx call options between June 26 and 28.
Those trades came just before Onyx on June 30 revealed that it had rejected as inadequate the unsolicited Amgen bid, which offered a 38.2 percent premium over its most recent closing price, and would put itself up for sale.
Onyx's share price soared 51.3 percent the next day.
CNBC'S CRAMER HAD TOUTED ONYX
In Tuesday's filings, Jafar and Nabulsi called themselves frequent options traders who engage in speculative trading.
Nabulsi added that he had been following Onyx since Jim Cramer, on CNBC's "Mad Money" TV show in early April, said it "may be one of the best new drug companies in the world." ()
"The SEC's assertion that the trades were 'highly suspicious' based on more general factors such as volume and price history is flawed, and reflects an oversimplified and unsophisticated view of options trading," Jafar said.
Call options give investors who expect a share price to rise the right to buy stock at a pre-set price. Options can result in large gains or losses relative to the sums invested.
The rise in Onyx stock resulted in profits of $2.33 million for Jafar and $195,950 for Nabulsi.
Suspicious trades in Onyx by all the unnamed defendants generated $4.6 million of profit on just $305,000 of investments in just a few days, the SEC said.
Jafar and Nabulsi said they had traded in their brokerage accounts at a Dubai branch of Beirut's FFA Private Bank s.a.l., and that the trades may have been routed through an omnibus Citigroup Global Markets account discussed in the SEC complaint.
Both defendants said they had no ties to an omnibus Barclays Capital account also referenced by the SEC.
The case is SEC v. One or More Unknown Traders in the Securities of Onyx Pharmaceuticals Inc, U.S. District Court, Southern District of New York, No. 13-04645.