Here's a conundrum: You're an analyst at a fund who just came across some sweet inside info on a pending private equity deal, and you just know that you could turn a tidy little profit if you could somehow manage to pull off a small trade and grab a taste...just a taste. But how?
And don't forget Preet Bharara is out there. Hunting. Tenaciously stalking small fires like you in order to prove once and for all that insider trading is still a thing that exists. You gotta play this smart.
Or if you're John Afriyie, formerly of MSD Capital, you play it not very smart at all.
"In February of this year, John Afriyie made a quick $1.5 million profit by trading in options of ADT stock. His profits were not the result of trading acumen, diligent research, or blind luck, but rather the alleged spoils of criminal insider trading. Afriyie allegedly traded on material nonpublic information he had obtained about a pending acquisition of ADT that had not yet been made public."
Oh Johnny boy, you never inside trade on your own account! That's just Criminality 101... What's that you say? It wasn't your account?
But then who's was it?
"Afriyie’s attempts to keep his alleged criminal insider trading secret by trading in his mother’s name failed, and thanks to the efforts of the FBI and the SEC, he will now answer to federal securities fraud charges.”
Your mom? Really?
In approximately 28 separate transactions between January 28, 2016, and February 12, 2016, AFRIYIE purchased approximately 2,279 ADT call options for a total of $24,254.02 before the public announcement of that transaction. AFRIYIE purchased the ADT call options through a brokerage account in the name of AFRIYIE’s mother, which AFRIYIE controlled.
So... Happy Mother's Day from Preet Bharara and the entire US Attorney for the Southern District of New York family!