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    Suspicious bet made before Goldman’s $ 2.2 billion acquisition of GreenSky

    Sam Edwards | Getty Images

    The day before Goldman Sachs Presentation $ 2.2 billion Fintech lender purchase GreenSkyThe move, as market participants say, shows that someone has made an option trade that quickly surged in value, showing prior knowledge of the trade.

    According to market participants, on September 14, traders purchased 8,000 options that would only be rewarded if the price of GreenSky exceeded $ 10. The option was underpriced and GreenSky was trading well below the strike price, so the cost per share was only 1 nickel.

    After trading news strikeThe value of the deal, which allows each to buy 100 shares of GreenSky, has skyrocketed. According to market sources, traders made a staggering 3,900% profit in one day. So a $ 40,000 bet is about $ 1.6 million.

    Acquisitions are complex transactions involving a team of bankers, lawyers, and other professionals who have access to information that drives the market. Information is often leaked due to the large amount of attention paid to transactions.A quarter of all listed companies’ transactions are somehow Insider tradingOften includes out-of-the-money calls in the options market, according to 2014 study By Professor of Stern School of Business at New York University and McGill University.

    Although the case of insider trading is involved Eye-catching According to a 2014 survey, in most cases perpetrators and people using non-public information that is important to the market, their activities are not punished.

    Goldman Sachs declined to comment on this article. GreenSky representative did not respond to voice message.. The Securities and Exchange Commission and financial industry regulators did not immediately return calls for comment.

    Goldman was itself Financial adviser I used Sullivan and Cromwell as a legal adviser. JP Morgan Chase When FT partner GreenSky advised that it also uses law firms Cravath, Swaine & Moore and Troutman Pepper Hamilton Sanders.

    GreenSky’s board had its own bankers and lawyers at Piper Sandler and Wilson Sonsini Goodrich & Rosati. Banks and law firms either declined to comment or did not respond immediately to the message.

    “No one is so lucky”

    The September 14th transaction was not the only unusually visionary bet made prior to the transaction with Goldman.

    GreenSky’s optional activities are usually muted, and less than 1,000 calls make up the average daily volume.Bet on a soon-to-be-profitable $ 10 call option Soaring However, it does indicate that multiple traders may have known about trading over the last two weeks.

    According to veteran trader and CNBC contributor Jon Najarian, the volume went from 153 calls on September 7th to 7,175 calls by September 9th. By September 13, two days before the announcement, call volume had reached 12,755. He said the deal was sold primarily for profit on September 15.

    “When we see such anomalous activity, we tend to think that someone had the newspaper of tomorrow today,” Najarian said. “No one is so lucky. Anyone who buys those phones will probably face regulatory agencies.”

    According to a former Wall Street executive with over 40 years of market knowledge, the deal was so brave that some phones were set to expire in just a few days, so anyone who made the deal You should be inexperienced. He said there was a way to make a bet that would make them less noticeable to regulators.

    “It looks like a 22-year-old kid who didn’t know what they were doing,” he said. “But that’s easy. They had inside information.”

    Financial columnist Matt LevineA former Goldman banker who writes extensively on insider trading, he has some guidelines on prohibited activities. His first rule (“Don’t do it”) is followed by a second rule.

    “If you have inside information about an upcoming merger, don’t buy short-term out-of-the-money call options at Target,” Levine wrote in 2014. digit.. “SEC gets you!”

    — CNBC’s Bob Pisani contributed to this report.

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    Suspicious bet made before Goldman’s $ 2.2 billion acquisition of GreenSky

    Source link Suspicious bet made before Goldman’s $ 2.2 billion acquisition of GreenSky

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