Press Release SEC Freezes Brokerage Accounts Behind Alleged Insider Trading FOR IMMEDIATE RELEASE 2017-80 Washington D.C., April 14, 2017— The Securities and Exchange Commission today announced an emergency court order to freeze assets in two brokerage accounts used last week to reap more than $1 million in alleged insider trading profits in connection with a merger announcement by telecommunications companies. According to the SEC’s complaint filed in U.S. District Court for the Southern District of New York, highly suspicious transactions have been detected surrounding last week’s announcement that Liberty Interactive Corp. had agreed to acquire General Communication Inc. The traders, who are currently unknown, allegedly used foreign brokerage accounts in the United Kingdom and Lebanon to purchase call option contracts through U.S.-based brokerages and on U.S.-based exchanges in the days leading up to the April 4 public announcement of the acquisition. The court’s order freezes the foreign accounts’ assets contained in the U.S. brokerages. According to the SEC’s complaint, some of the risky options positions taken in these accounts represented virtually 100 percent of the market for those options. Following the acquisition announcement, General Communication’s shares rose more than 62 percent and the brokerage account customers allegedly sold the bulk of the contracts. “As alleged in our complaint, the timing, size, and profitability of the trades as well as the absence of any recent trading by the accounts in these particular securities make the transactions highly suspicious,” said Michele Wein Layne, Director of the SEC’s Los Angeles Regional Office. “We don’t hesitate to act quickly and proactively to freeze accounts and prevent proceeds from dissipating while we continue to investigate dubious transactions and identify the traders behind them.” The emergency court order obtained by the SEC requires the traders to repatriate any funds or assets located outside the U.S. that were obtained from the alleged insider trading. The traders are prohibited from destroying any evidence. The SEC’s complaint charges the unknown traders with violating Section 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5. The SEC is seeking a final judgment ordering the traders to disgorge their allegedly ill-gotten gains plus interest and penalties and permanently enjoining them from future violations. The SEC’s investigation is being conducted by Patricia Pei, Andy Ganguly, Marc Blau, and Spencer Bendell of the Los Angeles office. The SEC’s litigation is being led by Lynn M. Dean and Amy Longo. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.
I would like to know the exact details of those options trades -- but I must imagine they must have made a killing...if the underlying stock rose by 62% It still amazes me how people could be so dumb, or naive, with insider trading...it's like robbing a bank and expecting to get away with it. It doesn't take a genius to detect the strange anomaly, or activity -- and for the authorities to come down on you.
Anytime a studious student of the markets makes a score, they want to take the profits away. Not fair
Someone should look into the panera deal too. Something doesn't smell right there either, as is often the case in typical WS fashion. There were people trading short dated zero outlay cost ratio call spreads (short more of higher strike call to fund long lower strike call) and the tender offer price is magically under their short strike. So pure profit and at zero cost to them to put the trade on. Some unnamed analyst also correctly predicted the likely acquirer out of a sea of potential investors around the world, as well as the likely range of the takeover price, even after panera had at the time just made a huge run up to ATH following then unsubstantiated rumors of a takeover bid. And then the price gapped even higher yet as the tender offer was finally announced at $315, just shortly after the first rumor. Yeah. Huge secret for those in the know, I'm sure.
gotta figure half of wall street only have day jobs as a front for the frontrunning of inside info. and the other half are in training to be like that