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Should the SEC Deputize the Zero Hedge Blog?

The beleaguered SEC can use all the help it can get right now, so maybe it should deputize the Zero Hedge blog?

On Sept. 17, one of its contributors ("Anal_yst") wrote in a post entitled, "Unsolicited Offer to the Securities & Exchange Commission: Hire Me," that the SEC was in such dire shape that

I personally just can't sit idly by and facepalm/laugh/cry anymore. I am hereby volunteering my services to help my Country and investors World-wide by going to work for the frenemy: the Securities & Exchange Commission. 

I'm offering to work inside the belly of the beast, to sit through hours of what are no-doubt eye-gougingly-boring staff meetings, meetings where inexperience and an incredible lack of natural curiosity are likely nourished.  I promise to tell you, the SEC, when you are about to get your FAIL on, when you are failing to connect two already connected dots, to act as the voice of reason in the absence of, well, any.

There was no indication that the SEC picked up on Anal_yst's offer, but just a few days later, on Sept. 21, ZH's lead contributor ("Tyler Durden") took matters into his own hands. In a post entitled, "Dear SEC: For Your Viewing Pleasure - Obvious Perot Front Running," Tyler Durden showed in graphic detail how insider trading had apparently occurred in advance of the Dell-Perot acquisition announced that day. He wrote:

As you likely are not aware, Dell today acquired Perot Systems (we imagine the companies used the attorney-client privilege to avoid disclosing any transaction details to you). All fine and good: here is the link to the 8K should you wish to familiarize yourself with the EDGAR filing system.

Yet something that you may want to consider in your 8 hour daily coffee breaks is the following. We present the option activity in Perot calls last week. Over 2,500 Oct $20 calls were purchased at about $1. The same option is now worth $9.60. The result: an approximately $2.2 million profit in the four days since the accumulation of the options started on September 15 by whoever the party(ies) that were tipped off about this deal.

Tyler Durden then presented several screenshots from Bloomberg showing activity in Perot call options that was unusual, to say the least. It is unknown whether Durden's "head's up" was the trigger, but less than 48 hours later, the SEC announced an insider trading case against an employee of a Perot affiliate for trading in the very options identified by Durden.

Posted by Bruce Carton on September 28, 2009 at 05:08 PM | Permalink | Comments (3)


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