All of the call options Robbins purchased had a strike price above Millennium's share price, which never closed at a price above $14.11 between February 29 and March 6. The $20 strike price for all but 200 of these call options was more than $5.50- more than 35%- above the highest Millennium share price traded during this time frame. In total, between Feb. 28 and March 6, 2008, Robbins invested over $46,100 in Millennium call options and stock.
They look at that stuff you know. I at least almost always come away from reading insider trading complaints thinking "boy these guys are dumb"; even the ones who are tricky enough to put the SEC to some police work still blow themselves up by trading like insider traders. Not that many way out-of-the-money call options trade, especially just before mergers, and if you're going to look for insider trading that's where you start.
One possible interpretation of the evidence is that insider traders are dumb, as a class, which is a possibility that you should take seriously. But another possibility is that regulators are really only equipped to catch dumb insider traders.***** "Round up the usual out-of-the-money call buyers," they say after each merger is announced. Easy pickings, but not necessarily central to protecting the fairness of our financial markets etc. etc. etc. etc. etc.
Possibly further evidence of these guys' dumbness:
"Robbins plotted with his business partner to perpetrate an insider trading scheme that enabled him to invest a portion of his illegal profits in their film production company,” said Sanjay Wadhwa, Senior Associate Director for Enforcement in the SEC’s New York Regional Office.
Nonononononono. You take your illegal profits and you invest them in an estate in a non-extradition country. Not in, say, a movie whose tag line is "Lying Is Easy, Love Is Hard." That's a good way to lose all your profits. Also, the tag line isn't great for your defense.
* Actually the SEC isn't clear on how the cash was packaged, unlike in other cases, where there are photos and detailed descriptions of the cash packaging.
** For instance:
Similarly, on February 28, 2008, Allen sent an email to a colleague indicating that Takeda "raised the tender offer price to $25." That day, Allen travelled from New York to Atlanta, and, at 10:13 pm, there was a phone call placed from Allen's home number (in Atlanta) to Bennett's cell phone lasting approximately nine minutes. Shortly after ending his call with Allen, Bennett called Robbins's cell phone from his cell phone. This call lasted approximately three minutes.
*** Like, wait, does the MTA track Metrocard use and associate it with a credit card? Or did they only catch these guys by saying "hey can we look at your Metrocard for a minute?"? Or what?
**** Especially if you've never traded options before.
***** And SAC Capital, but that's a special case.