The US Securities and Exchange Commission is investigating a January 14 spike in trading in BlackBerry options that took place hours before reports emerged that Samsung was in talks to buy the Canadian smartphone maker.
One trade the SEC is looking at took place at 12:06 pm on that day, according to a person familiar with the investigation. The trade involved a purchase of options with the rights to buy 200,000 shares of BlackBerry stock at a strike price of US$10 a share, the person said.
Later that afternoon, Reuters reported Samsung had offered to buy BlackBerry for as much as US$7.5 billion, valuing its stock at between US$13.35 to US$15.49 per share, a 38 percent to 60 percent premium over BlackBerry’s trading price at the time.
BlackBerry’s stock, which closed on Jan. 13 at US$9.71, shot up 30 percent on the news to close at US$12.60 on Jan. 14, its biggest one-day gain in years.
The call options, which expired on January 23, were purchased for 10 cents in the trade, and surged on the report to a high of US$2.55.
If the buyer had been able to sell the options at that high they would have been able to make a profit of US$490,000 on a US$20,000 investment. It is unclear, though, whether the buyer was able to sell the options at a profit.
The SEC is investigating whether a source of information provided to Reuters bought Blackberry options, according to the person familiar with the investigation.
Both companies later denied they were in talks and BlackBerry’s shares tumbled. Reuters subsequently corrected its story to make clear that the discussions were between advisors rather than company officials.
There is no indication Reuters is a target of the investigation. A spokeswoman for Thomson Reuters declined to comment. A spokesman for the SEC also declined to comment.