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ยท Posted on
February 21, 2024

US regs smell a rat at Activision and by rat we mean insider trading

What's that smell? It could be the pungent scent of dodgy dealings at Activision Blizzard.

What's the key learning?

  • Insider trading happens when investors trade publicly listed shares based on secret insider info.
  • Only an estimated 15% of insider trading in the US is ever discovered, so this is a big deal if it turns out to be true.

๐Ÿ‘‰ Background: In January, Microsoft agreed to buy Activision Blizzard - the folks behind Call of Duty, Guitar Hero and Crash Bandicoot.

๐Ÿ‘‰ What happened: Here's the fishy part. The Activision CEO and an investor had a brekky meeting. That investor then bought Activision options for US$40 per share. THEN Microsoft acquired Activision at US$95 per share.
๐Ÿ‘‰ What else: The people involved are denying any foul play, but if this turns out to be true, it would be the highest-profile insider trading case since... Martha Stewart!

๐Ÿ”” What's the key learning?

๐Ÿ’ก Insider trading involves trading publicly listed shares based on information that could only be known by an insider. And it's notoriously hard to prove and prevent.

๐Ÿ’ก A 2020 study estimated that just 15% of insider trading in the US is detected and prosecuted. And that's because it's often hidden behind nominees, offshore companies or other proxies.

๐Ÿ’ก There's also generally a lot of unusual trading activity ahead of big merger announcements. So, we'll have to wait and see whether this story's got legs.

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