(Bloomberg) — Federal prosecutors and U.S. securities regulators are investigating options trades on Activision Blizzard Inc. made by Barry Diller and others in advance of the announcement of the video-game company’s acquisition by Microsoft Corp., the Wall Street Journal reported, citing people familiar with the matter.
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IAC/InterActiveCorp Chairman Diller, entertainment executive David Geffen, and Diller’s stepson Alexander von Furstenberg bought options to purchase Activision shares at $40 each on Jan. 14 in transactions privately arranged by JPMorgan Chase & Co., the newspaper said. Activision shares were trading at about $63 at the time, according to the report. Microsoft announced on Jan. 18 it had agreed to purchase the game developer for $68.7 billion.
The U.S. Department of Justice and Securities and Exchange Commission are investigating whether any of the options trades violated insider-trading laws, the Journal reported, citing unidentified people familiar with the matter.
Diller said he has been contacted by regulators and called the decision to purchase the options “a lucky bet,” the newspaper said.
The three men have made an unrealized profit of about $60 million on the options trade, based on Activision’s recent share price, according to the Journal.
Representatives of IAC and Expedia Group Inc., where Diller also serves as chairman, didn’t immediately respond to requests for comment. A representative for Geffen couldn’t immediately be reached.
Spokespeople for the SEC and Justice Department didn’t immediately respond to requests for comment sent outside of normal business hours. JPMorgan declined to comment.
(Updates with attempts to reach Diller and Geffen in the sixth paragraph.)
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