Difference between revisions of "How not to insider trade"
From Hedge.lu
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| − | https://www.bloomberg.com/view/articles/2013-09-23/insider-trading-buddies-nailed-by-metrocards- | + | == Firms Involved == |
| + | * Millenium Pharmaceuticals | ||
| + | |||
| + | == Year of the event == | ||
| + | 2008 | ||
| + | |||
| + | == Description of the case == | ||
| + | In 2008, Takeda agreed to buy their competitors Millenium for an amount of 2008. However, shortly before the acquisition was announced, several people stumbled upon the information. In particular, John Michael Bennett learned about it through a friend working at a human resources consultancy firm. He used this information to invest heavily in short-dated out-of-the-money call options on Millenium stock<ref>[https://www.bloomberg.com/view/articles/2013-09-23/insider-trading-buddies-nailed-by-metrocards- Bloomberg, ''Insider Trading Buddies Nailed by... Metrocards?'']</ref>. While he made a significant amount of money, the SEC identified the fraudulent transactions and linked them to Bennett, who pleaded guilty to criminal insider trading in 2013<ref>[https://www.sec.gov/news/press-release/2013-191#.UkByPYakoko%20 SEC, ''SEC Charges Independent Filmmaker With Insider Trading'']</ref>. | ||
| + | |||
| + | == Take-aways == | ||
| + | * Do not insider trade | ||
| + | * If you do, do not buy short-dated out-of-the-money call options (but really, you shouldn't) | ||
| + | |||
| + | == References == | ||
| + | <references /> | ||
Latest revision as of 17:49, 22 June 2017
Firms Involved
- Millenium Pharmaceuticals
Year of the event
2008
Description of the case
In 2008, Takeda agreed to buy their competitors Millenium for an amount of 2008. However, shortly before the acquisition was announced, several people stumbled upon the information. In particular, John Michael Bennett learned about it through a friend working at a human resources consultancy firm. He used this information to invest heavily in short-dated out-of-the-money call options on Millenium stock[1]. While he made a significant amount of money, the SEC identified the fraudulent transactions and linked them to Bennett, who pleaded guilty to criminal insider trading in 2013[2].
Take-aways
- Do not insider trade
- If you do, do not buy short-dated out-of-the-money call options (but really, you shouldn't)
