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Report: SEC Probing 3Com for Potential Insider Trading

Wade Roush 11/16/09

The Securities and Exchange Commission is investigating whether a surge in call option trading on 3Com shares just hours before the announcement that Hewlett-Packard would take over the Marlborough, MA-based networking equipment maker for $2.7 billion was a result of insider knowledge of the deal, Bloomberg and other outlets are reporting today. Trading in call options—which guarantee the right to acquire a stock at a certain price—hit a 26-month high on November 11, just before the after-hours announcement of the acquisition. That “screams insider trading to the SEC,” Wayne State University law professor and former SEC attorney Peter Henning told Bloomberg, whose report was based on information from an unnamed source inside the agency.

Wade Roush is Xconomy's chief correspondent. You can e-mail him at wroush@xconomy.com, call him at (617) 252-7323, or follow him on Twitter at http://twitter.com/wroush.

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