An investigation for insider trading by federal prosecutors and securities regulators is underway after three investors were reported on. Barry Diller, Alexander von Furstenberg, and David Geffen invested roughly $108 million in Activision Blizzard. The investment was made in January, prior to the announcement that Microsoft would acquire the company in an all-cash transaction valued at $68.7 billion. That deal is already under an antitrust review by the FTC, but now the Justice Department and SEC are involved.
The privately arranged transactions were processed by JPMorgan Chase & Co. After the deal went public, it was reported to authorities, which began an investigation for insider trading. Following the deal announcement, the value of the investment saw a quick gain of $60 million. If the investors hold onto their shares until the completion of the Microsoft deal, their profits could potentially exceed over $100 million.
The three investors are all said to have ties to Bobby Kotick (CEO of Activision Blizzard). Mr. Diller has been quoted as saying that he is a longtime friend of the CEO, while Alexander von Furstenberg is Mr. Diller’s stepson. David Geffen is also said to be a longtime friend. Mr. Diller told The Wall Street Journal that none of them knew about the deal with Microsoft and that it was merely a “lucky bet.” It remains to be seen if charges will be brought against any of the three, but this latest controversy follows a number others in recent years that have involved Activision Blizzard.