Well that didn’t take long. Remember Insider’s Tip #6 for Wannabe Insider Traders?
We’re happy to report that it was neither a lawyer (it was an all-Texas affair, Baker Botts for seller, Vinson & Elkins for buyer) nor a banker who blew up the options market in Perot Systems just prior to the announcement the company would be acquired by Dell in a $3.9 billion deal.
The SEC has charged an insider in the case – and they tracked him down in about a week.
Details, including his impressive, albeit short-lived, profit, after the jump.
The insider trader, whom we’ll also be calling “the defendant” going forward is Reza Saleh. He has been charged by the SEC for “reap[ing] approximately $8.6 million in illicit profits.” Well done, sir! As we always say, if you’re going to be a bear, be a grizzly. Much better than Nixon Peabody’s Melissa Mahler, who only made $5,800. It turns out he locked up way more than the 2,539 options traded that caught Bloomberg’s attention. He actually had 9,332 call option contracts in two separate accounts.
It’s not clear what, exactly, Saleh does from the complaint, but he works for various Perot Systems entities. In the course of his work, he figured out that something was up. But he’s a prudent crook, if nothing else.
Although Saleh was not part ofthe tender offer deal team, on or before September 8, 2009, Saleh asked questions of the PS Director that demonstrated Saleh’s awareness of material, nonpublic information about a pending transaction pursuant to which Perot Investments would be acquired at a “premium.” The conversations with the PS director confirmed for Saleh that the transaction was going forward.
OK, maybe he’s not that prudent. Apparently, after he was questioned (when prudence would dictate STFU and get a lawyer), he then went and tattled on himself to his colleagues.
After being contacted by Commission staff on the afternoon of September 21, 2009, Saleh made additional statements to the PS director and another employee of Perot Investments in which Saleh acknowledged that his purchases of Perot Systems call options were based on his knowledge of the impending transaction.
A final anecdote: one of the two AUSAs signing the complaint is Kevin Edmundson, who was arrested earlier this year for “assault on a public servant” after a jaywalking incident.
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