Insider trade on Splunk acquisition?

It's definitely suspicious and will probably be looked into. If it turns out it's a trader who regularly buys soon-to-be-expiring option calls, maybe it'll fly. But if the trade was made by someone who doesn't regularly make $20,000 options bets, they will need a good explanation.

Why will they need a good explanation? Can't they just say I lucked out and the burden of proving insider trading would fall on the SEC? Innocent until proven guilty right?

If they did not usually trade in such options but suddenly started doing so the day before it had a major market-moving event, that could be the type of "reasonable suspicion" that you need to get a search warrant from a judge. From there on, investigators could demand access to (say) electronic communications to determine if the person doing the trade got a text from a friend saying "yo buy 20k of short term call options on Splunk you won't regret it bro" or something similar.

Especially if the person doing the trade is found to be employed by (or closely related to someone employed by) Cisco or Splunk or one of their banks.

They could probably just tell the SEC, "I think you're a bunch of stupid doodooheads" and see how well that works.

Yes, if the SEC chooses to refer to the US Attorney then the gov't will need to prove to a jury that insider trading occurred.

But, to start, the SEC will just come knocking and asking questions. If you have a good explanation then they'll go away. But if you don't then they'll keep digging, get warrants, etc.

If it's some random hedge fund that makes these bets all the time then the SEC will probably go away. If it's a broke old lady who opened her brokerage account a week ago then it's pretty clear what's going on, and they'll have the tools they need to turn the screws and get to the bottom of it. And if it's someone whose wife works in Cisco M&A then it'll be pretty open and shut because these kinds of mergers keep track of who had access to what info, for exactly this reason.

Works great if your rich enough.. Maybe they will go private at $420 a share.....

A jury gets to decide whether the evidence proves the crime. Do you think a prosecutor could convince the jury that no reasonable person would make that bet without insider knowledge?

I've been downvoted here before for telling people what Musk says SEC stands for. But this guy didn't make plutocrat money off the trade, so he should watch his back for sure.