SEC Sues Unidentified Traders Over Suspicious Activity Before The Heinz Deal

Discussion in 'Wall St. News' started by OnClose, Feb 15, 2013.

  1. OnClose


  2. yeah, somebody banked but maybe they just got lucky. I believe that people are honest. :cool:

  3. OnClose


    It was probably just a member of Congress and that of course would make these trades perfectly legal.
  4. ktm


    ...and a real amateur effort.

    With 90K in cash and all the inside info, they could have made much much more with the right structure in place.

    At least they were smart enough to do it through Switzerland where they may have a chance to get away with it. When 3G leaked the burger king deal, that guy was in Miami. That didn't work.
  5. luisHK


    Not that the traders very discreet, but how could one make more than buying otm calls just before the deal is announced ?

    MMs better be properly hedged.
  6. Oh the irony. When the old codger Buffett made most of his money trading on inside knowledge.....
    How dare someone trade on inside knowledge on his deal.
  7. ktm


    Without giving it much thought...the calls were JUNE 65 and were 30 to 40 cents I think. Again, I haven't looked at the chains, but how much were the Feb calls (or even March) if the June calls were 30 cents? .05 $7.50...divided by $90,000. You'd make 6X to 8X more right there.

    Then sell a load of Feb $72.50 puts in addition to buying the calls.

    This is just basics. I think with some right sized condors and fly's you could probably improve upon this even more. Depends on how much powder the guy really had, the broker, whether he was reg T or PM etc...
  8. luisHK


    Thanks Ktm, I thought you meant something else than vanilla options trading. Buying front month otm calls and selling ditm puts will hardly make the trade less suspicious though.
  9. a lot of times insider trading doesn't work, e.g. when the source is giving bunk information. It happens all the time. I personally would want not part of it, not even from a legality perspective.

    Can't assume the guy was a moron for buying the 65 instead of 70, maybe he didn't have hard numbers. Anyway, it worked out for him, congrats.
  10. I smell setup, SEC act reckless fast on this one, the account allegedly has very suspicious name associated with it, the whole thing could be farce.
    #10     Feb 16, 2013