The US Securities and Exchange Commission (SEC) and its Canadian counterpart are probing whether a recent news report about a possible takeover of BlackBerry by Samsung was deliberately created by someone who wants to profit from the resulting stock price surge.
News reports about possible takeovers frequently cause big changes in the share prices of companies involved, and shareholders make big, quick profits out of the situation.
People familiar with the matter told The Wall Street Journal that the SEC and the Ontario Securities Commission have begun examining trading activity around the time of a report by Reuters in January that said Samsung was planning to acquire BlackBerry for about $7.5bn.
Investigators will probe if the 14 January news that was denied by the companies was deliberately fed to the news agency by someone for profiting from the share price increase.
Reuters reported the US SEC is investigating an unusual surge in trading in BlackBerry options hours before the report on 14 January. In one suspicious trade, there was a purchase of options with the rights to buy 200,000 shares of BlackBerry stock at a strike price of $10 a share.
According to the report, Samsung proposed a range of $13.35 to $15.49 per share representing a premium of 38% to 60% over BlackBerry's then trading price. The news led to a 30% surge in BlackBerry's stock — the biggest gain for the company since 23 December 2003.
If the buyer of the said call options were able to sell them, the person could have made a profit of $490,000 on a $20,000 investment, according to Reuters.
The news agency added, citing a person familiar with the investigation that the SEC is probing if a source of information provided to it bought Blackberry options. It further said there is no indication it is a target of the investigation.