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The WSJ is reporting that the SEC is looking at specific Health Care takeovers that seemed to be tipped in advance to several big hedge funds. The chart (above) shows the extent and timing.

There are many legal reasons to have owned these names, but the issue here is whether or not the funds received material non public inside information about the takeovers from their “expert networks.” If that turns out to be the case — and so far, we do not know if it is — it would be problematic.

Are these so called expert networks nothing more than good old fashioned inside M&A information being exchanged for cash? If that was the case, there will likely be jail sentences . . .

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Source:
Holdings Spiked Near Deal Time
JENNY STRASBURG, MICHAEL ROTHFELD, TOM MCGINTY and SUSAN PULLIAM
WSJ, December 2, 2010
http://online.wsj.com/article/SB10001424052748704377004575651260207181920.html

Category: Legal, M&A

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

9 Responses to “Insider Trading Prove Focused on M&A Tips”

  1. grampa7 says:

    Couldn’t some portion of the increase in holdings be due to merger arb positions taken AFTER the deal is announced?

    Of course, the SEC could review trading records to determine when these trades were placed.

  2. wally says:

    psst: “Probe” ?

  3. Simon says:

    Wondering why we aren’t hearing more about China’s monetary policy today. I say this: http://tinyurl.com/33uhwak

    If China keeps tighten, this author is making some very bearish statements about Treasury bonds and commodities if you read between the lines.

  4. wunsacon says:

    “Jail sentences”? Oh, I hope you’re right. But, it seems the US government’s calendar has its hands full with Wikileaks.

    Someone at ZeroHedge should create a “Hillary Clinton desktop”, similar to the treatment they gave Bernoccio: http://www.zerohedge.com/article/artists-rendering-ben-bernankes-desktop

  5. formerlawyer says:

    What about the economic arguments that insider trading is “good for the market/economy”?

  6. ToNYC says:

    Trading on Insider Information is being reassigned to its proper place with Bank-owned hedge funds only. We’ll be rounding up the usual scruffy suspects to keep our skirts clean and deligitimize talented upstarts we don’t control for messing-up the picture with our Big accounts.

  7. manifest says:

    What part about the Wall Street I Bud Fox perp walk is misunderstood?

  8. FrancoisT says:

    Congresspeople can engage in all the insider trading they want. After all there is a good reason why they earn, on average, a CAGR of 34% as a group. (I don’t have the reference with me but I can remember this: Journal of Quant Finance, 2002, Read on Mark Hulbert MarketWatch around March 2005)

    So, if it is legal for the enemies of The People that populate Capitol Hill, what can’t the rest of us do it?

  9. pjcalafi says:

    Here’s the link to congresspeople superior stock-picking abilities: http://insidertrading.procon.org/view.answers.php?questionID=001034