The SEC is looking into what many people are calling a blatant sign of insider info on the Hewlett-Packard for 3Com acquisition according to Bloomberg (hat tip Zero Hedge).
In case you missed it:
More than 8,000 3Com calls changed hands on Nov. 11, 17 times the four-week average. The most active were contracts conveying the right to purchase shares for $5 through Nov. 20, followed by December $5 calls.
Almost 4,000 of the November $5 calls and 3,300 December $5 calls traded, with almost all of the transactions occurring at noon. That compares with a total of six puts giving the right to sell 3Com shares. Palo Alto, California-based Hewlett-Packard, the world’s largest personal-computer maker, agreed to pay $7.90 a share in cash for 3Com, a 39 percent premium to the closing price on Nov. 11. The stock closed at $7.51 on Nov. 13.
This looks like a mirror image to the Dell for Perot Systems buyout of September, the regulators ultimately nabbed an employee who spread news of the deal and traded ahead.
To reiterate, I’m happy to see these blatant cases of insider trading mopped up, and I’m proud of my fellow financial bloggers who were all over the story as it happened. For more on how the financial blogosphere broke this story in real-time, read here: