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.”
Read more: Insight: When options trading ahead of deals raises eyebrows | Firstpost
