SEC Probing 3Com Option Trades

Tyler Durden's picture

The SEC has no problem being all over what is handed to them on a silver platter. As to the pyramid scheme that the market now is, they'll just leave that one alone. " Bullish bets on 3Com Corp. options
four hours before Hewlett-Packard Co.’s bid for the maker of
computer-networking equipment are being investigated by
regulators, according to a person familiar with the matter."

The chances this was an innocent calendar spread, or a trade masked as one, are promptly going to zero.

Bloomberg reports:

The Securities and Exchange
Commission is examining whether someone used advance knowledge
of Hewlett’s offer to illegally profit from the surge in 3Com’s
stock when the deal was announced, according to the person, who
declined to be identified because the inquiry isn’t public.

“It screams insider trading to the SEC,” said Peter
Henning
, a law professor at Wayne State University in Detroit
and former SEC attorney.

Way to earn that $1 billion budget SEC. $50,000 booty split TBD.

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E pluribus unum's picture

Who's the lead investigator - Stevie Wonder?

LoneStarHog's picture

Another SEC "investigation"?  The SEC could not manage their bowel movements if their assholes did not do it for them.

Just like the so-called SILVER investigation at the CFTC.

When they have Dimon, Blankfein, Paulson, Geithner, et al in CUFFS, I just MIGHT start to believe something.

Anonymous's picture

SEC investigate silver? That is also handed to them yet.... Am visiting China right now and while they speak in hushed tones, the USA's truth is known and the dollar is not Happy Lucky Fun Time. When even the educated Chinese students (rightly) laugh right at Turbo Timmy during his visit here...

Got gold and silver?

PS: Amazing amount of new cars here in Beijing! traffic jam almost all day long even though each car can only drive every other day to reduce traffic(!). Chinese are buying more new cars than USA nowadays.

buzzsaw99's picture

The SEC got the go-ahead from teh big banx. Free Sergey!

Anonymous's picture

I just wonder why the SEC doesn't mandate the clawback of all options or stock trades made within a day of a major merger or acquisition. That would make it harder for these kinds of shenanigans to occur.

Anonymous's picture

The customer bought calls in both months (it was not a calender spread) and agreed to have the trade taken down after the news came out.

He likely was a cheater who decided to give the money back after realizing he was caught. The real winner is the firm who sold the options and bought stock against it only to have the losing side of the trade canceled.

Anonymous's picture

Do you have a link to where this was reported? I missed it.

Thank you

janchup's picture

The SEC does, at least, have to pretend, sort of, to have a job to do.

buzzsaw99's picture

They got a bigger budget because they helped the banks cook the books.

Anonymous's picture

watch them "catch" whoever did it only to see their case fall apart on technicalities or crappy evidence

Fibozachi's picture

Buzzy Krongard and OJ-esque probabilities surrounding 9/11 and front month airline equity options ... nah !

$780 bucks for Hawaiian ... now that is juicy !!

Thanks SEC !!! 

Give Patty Byrne 1% of their annual budget and see how many Steinhardts get nabbed.

Anonymous's picture

Trade-offs must be made in enforcement activities. Martha Stewart was a high value target. The listers and buyers of the Bear Stearns puts, not so much.
My money is on Geithner as Bear buyer, he fits the profile.

Lee S.

Anonymous's picture

Does anyone know whatever became of this?