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U.S. regulators probe Diller and Geffen options trades surrounding Microsoft-Activision deal

Barry Diller and David Geffen are two individuals whose ATVI stock options are being investigated by the United States government.

Asif Khan

March 8, 2022 7:30 PM

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United States securities regulators and federal prosecutors are investigating large stock option trades made by David Geffen, Alexander von Furstenberg, and Barry Diller. The trades were large bullish bets using in-the-money call options on Activision Blizzard's stock and were apparently made just days before the nearly $70 billion acquisition by Microsoft was announced. 

WSJ is reporting that the three individuals have an unrealized profit of approximately $60 million from the options bet. The trade involved the purchase of $40 strike calls (expiring in January 2023) when the stock was trading around $63/share. The SEC is investigating if civil insider-trading laws have been broken, while the Justice Department is also investigating if the options trades were done without material non-public information. Barry Diller is on the record saying, "It was simply a lucky bet. We acted on no information of any kind from anyone. It is one of those coincidences.” His stepson Mr. von Furstenberg had been buying up shares of ATVI prior to the options bet being placed, according to Diller. 

JPMorgan reported the trades to regulators because the company is required to do so under a criminal settlement it reached in September 2020 relating to market-manipulation claims. The options trades were arranged privately by JPMorgan, rather than purchased on the open market. If the MSFT-ATVI deal closes at the agreed-upon price of $95/share, the three individuals stand to make a $100 million on a call options bet of $108 million.

Barry Diller and Bobby Kotick both served on the Coca-Cola board of directors, up until last week when Activision's lame duck CEO announced he would not seek re-election. Diller has described Bobby Kotick as "a long-time friend," and it is certainly possible that some material nonpublic information was shared between the two of them. Only time will tell just how shady these options trade truly were. The timing of the trades were enough to have multiple government regulators sniffing around these already well-off individuals.

Do you think Diller, Geffen, and von Furstenberg were just lucky with incredible timing? Do you think this is a case of insider-trading? Let us know the in the Shacknews Chatty comments thread below. 

This article is only meant for educational purposes, and should not be taken as investment advice. Please consider your own investment time horizon, risk tolerance, and consult with a financial advisor before acting on this information.

Asif Khan

CEO/EIC/EIEIO

Asif Khan is the CEO, EIC, and majority shareholder of Shacknews. He began his career in video game journalism as a freelancer in 2001 for Tendobox.com. Asif is a CPA and was formerly an investment adviser representative. After much success in his own personal investments, he retired from his day job in financial services and is currently focused on new private investments. His favorite PC game of all time is Duke Nukem 3D, and he is an unapologetic fan of most things Nintendo. Asif first frequented the Shack when it was sCary's Shugashack to find all things Quake. When he is not immersed in investments or gaming he is a purveyor of fine electronic music. Asif also has an irrational love of Cleveland sports.