Within 36 hours of Warren Buffett’s announcement of a deal to buy
H.J. Heinz, U.S. authorities froze an account linked to possible insider
trading.
The speed of the crackdown on a lucrative options bet, combined
with successful prosecutions of insider trading rings, suggested that
regulators were quickly jumping on any suspicious activity.
Yet some veterans of the options business are unconvinced. They
worry that very profitable options trading ahead of big corporate news
is undermining investor confidence in the fairness of markets.
The U.S. Securities and Exchange Commission has announced litigation or
enforcement action for alleged insider trading involving options trading
in two of these companies – Heinz (HNZ.N) and Shaw Group, a nuclear power plant builder acquired by Chicago Bridge & Iron (CBI.N) for $3 billion. Neither Heinz nor Chicago Bridge & Iron would comment on the trading.
When asked for comment, an SEC spokesman said the options market “has
been and will continue to be an area of focus,” adding that a “simple
search of the SEC website will show many, many insider trading
enforcement actions involving options.”
EU-Digest
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