US financial watchdog the Securities and Exchange Commission has launched an investigation into possible insider trading relating to GlaxoSmithKline’s $566 million acquisition of consumer healthcare firm CNS, announced on October 9.

The SEC is looking into a number of trades in CNS shares made between September 27 and October 2, acquiring stakes which were sold on October 9 and 10 and realised a profit of more than $650,000.

“The unknown purchasers' trading coincided with key non-public and confidential events leading up to the announcement that Glaxo would acquire CNS,” said the SEC in a statement.

The SEC has won a court injunction against the traders, who purchased call option contracts on CNS via foreign accounts held at US broker-dealers, freezing the proceeds while the investigation continues.

GSK has offered $37.50 for CNS and the transaction is scheduled to close by early 2007.

The deal gives the UK-headquartered pharma giant access to two key products, CNS’ Breathe Right nasal strips and FiberChoice dietary fibre supplements, which helped drive sales at CNS up 18% to $119 million last year.