SEC drops Onyx insider trading lawsuit against Dubai men

NEW YORK (Reuters) - The U.S. Securities and Exchange Commission has decided to drop a lawsuit accusing two Dubai men of insider trading in Onyx Pharmaceuticals Inc while the cancer drugmaker was mulling a takeover bid by Amgen Inc .

Without explanation, the SEC asked U.S. District Judge Paul Oetken in Manhattan to dismiss its case against Dhia Jafar and Omar Nabulsi without prejudice, and lift a $2.55 million asset freeze on two accounts they held at Citigroup, according to a Tuesday court filing.

The request came even after Oetken in June had rejected the defendants' argument that a decision last December by the 2nd U.S. Circuit Court of Appeals narrowing the definition of insider trading required the dismissal of the SEC's case.

Oetken nonetheless said that decision "may make it more difficult for the SEC to ultimately prevail" against Jafar and Nabulsi.

SEC spokeswoman Judith Burns declined to comment. Patrick Smith, a lawyer for Jafar and Nabulsi, was not immediately available for comment.

Jafar's and Nabulsi's accounts were frozen in July 2013, soon after the SEC uncovered what it called suspicious trading in Onyx call options on June 26 and 28 of that year.

Onyx on June 30 revealed that it had rejected an unsolicited $10 billion bid from Amgen, and said it would put itself up for sale. Shares of Onyx soared more than 51 percent the next day. Onyx was ultimately bought by Amgen.

Jafar and Nabulsi have long maintained that they did nothing wrong, and that they had frequently traded in stock options.

The case is SEC v. Jafar et al, U.S. District Court, Southern District of New York, No. 13-04645.

(Reporting by Jonathan Stempel in New York; Editing by Tom Brown)