Insider trade on Splunk acquisition?

My understanding is that having material nonpublic information is not—in itself—enough to make a trade illegal. As long as you're a true outsider, and didn't get that info using illegal means, you can trade on it.

Maybe this whale was tracking tail numbers, drove down to the executive airport, and saw that Cisco's chief M&A guy had a huge grin on his face as he stepped onto the plane.

(Okay, I doubt that highly, but it is a scenario)

Cisco and Splunk are both HQ'd in SF. If they were at the airport, it was coming back from Jackson hole or something.

The real trouble with 'maybe they were legit outsiders' is the options expired specifically today, which means you need to know _when the announcement_ is to profit.

I initially thought this wasn't the case, but did some research - so for posterity: if you overhear the information in a public setting you may be ok. It depends on whether you have a duty of trust, apparently, and personally I'd run it by a lawyer before firing up Robinhood. [1] Although (1) IANAL and (2) you may still be answering difficult questions if you structure your trades the way this individual did.

[1] https://money.com/insider-trading-examples/

I strongly suspect these trades are not legit. That said, the trader didn't necessarily KNOW that the deal would be announced today. Trading is a game of probabilities. It's possible that the trader used public information to figure out that Splunk could be acquired soon and there was a small but non-zero chance it would be announced today. In that case taking a $22k flyer on cheap options is a good risk-adjusted bet for a well-capitalized investor. (Although they'd have to factor in that this WILL result in a visit from the SEC, which is probably not fun even if you've done nothing wrong.)

SPLK option expiration dates are weekly out to 6 weeks.

There is precedent that even if you are in possession of info that will eventually become public, which you then trade on, you can still be convicted of insider trading.

For example, a Printer for Business Week and a Stock Broker traded on pre-publication information and were convicted of insider trading.

https://corporateinsiderstrading.wordpress.com/2012/02/01/bu...

Fun fact: Cisco is actually headquartered in San Jose, but I believe that both companies have large engineering offices in both San Francisco and San Jose.

For those who don't know, they're both part of the same metro area (Bay Area) but they're 50 miles apart, anywhere from 1 to 2 hours apart depending on traffic.

Yeah, I don’t know, an investor sophisticated enough to predict that without insider information, I would have to hope that they would also be sophisticated enough to make the trade less blatantly obvious as a big bundle on 1 day expiration otm call options.

> for using stock information in “Business Week” magazine before it was distributed to the public

They traded on information that was non-public at the time of the trade. Why shouldn't that be treated exactly as trading on news of this merger before it was announced? (The merger was eventually going to be known to the public as well, right?)

The printer has an obligation of trust. Someone overhearing your loud phone conversation in public does not.

Still not taking a flight from SFO to SJC to seal a deal.