Topline
The Department of Justice and Securities and Exchange Commission are investigating whether moguls Barry Diller, David Geffen and Alexander von Furstenberg violated insider trading laws by buying Activision Blizzard options shortly before the video game company announced an acquisition by Microsoft, the Wall Street Journal reported Tuesday—but Diller says they didn’t have prior knowledge of the impending deal.
NEW YORK – MARCH 15: Inductee David Geffen attends the 25th Anniversary Rock & Roll Hall of Fame … [+]
Key Facts
The three men purchased call options to buy Activision Blizzard shares at $40 on January 14, four days before tech giant Microsoft agreed to buy the company at $95 per share, according to the Journal, which cited unnamed sources (shares of Activision Blizzard were worth $82.31 at close on the day the acquisition was announced).
The trades by Diller, Geffen and von Furstenberg led to unrealized profits of around $60 million, the Journal reported.
JPMorgan Chase, through which the men arranged the transactions, reported the trades to law enforcement, according to the Journal.
In a statement sent to Forbes through his media conglomerate IAC, Diller denied that he or the other men knew about the looming Microsoft-Activision purchase when they bought the call options, which are effectively bets that the share price will increase.
Neither Geffen nor von Furstenberg immediately responded to Forbes’ request for comment.
Crucial Quote
“None of us had any knowledge from any person or any source or any anything about a potential acquisition of Activision by Microsoft,” Diller told Forbes in a statement sent by IAC. “We acted simply on the belief that Activision was undervalued and therefore had the potential for going private or being acquired. And, if we had any such information we would never have traded on it—it strains credulity to believe we would have done so three days before Microsoft and Activision made their announcement.”
Tangent
Geffen, a music mogul and entrepreneur who helped found the film studio DreamWorks, is worth $10.1 billion according to Forbes’ estimates, and Diller—the founder and chairman of IAC—is worth $4.4 billion. Von Furstenburg is the son of fashion designers Diane von Furstenberg and Prince Egon von Furstenburg, and he’s a member of the IAC board.
Key Background
Microsoft unveiled plans to buy Activision Blizzard—which makes popular games like Call of Duty and World of Warcraft—in January, in an all-cash deal that valued the gaming company at $68.7 billion. The deal came during a turbulent time for Activision Blizzard: Its employees have reported widespread sexual harassment, and the SEC reportedly opened an investigation into the company’s handling of harassment allegations last year.
Source: https://www.forbes.com/sites/marisadellatto/2022/03/08/feds-investigating-barry-diller-and-david-geffen-for-options-trades-ahead-of-microsoft-activision-deal-report-says/