American and Canadian Regulators investigate BlackBerry, Samsung takeover report

The SEC and Ontario Securities Commission are in the early stages of investigating a Reuters report that Samsung had offered around $7.5 billion to acquire BlackBerry.

On January 14th BlackBerry’s stock surged by 30 percent on the back of the rumors, and nosedived just as quickly after both Samsung and BlackBerry denied the talks later that day.

Investigators will probe if the news was deliberately fed to the news agency by someone for profiting from the share price increase.

The Securities and Exchange Commission and the Ontario Securities Commission are in the early stages of examining trading activity around the time of a report by Reuters in January that Samsung was pursuing a takeover of BlackBerry for as much as $7.5 billion, according to people familiar with the matter.

Investigators are looking at whether someone deliberately fed information to reporters at the news service for the purpose of profiting on the resulting stock increase, one of the people said.

News reports about possible takeovers frequently cause big changes in the share prices of companies involved, and shareholders make big, quick profits out of the situation.

Reuters reported the US SEC is investigating an unusual surge in trading in BlackBerry options hours before the report on 14 January. In one suspicious trade, there was a purchase of options with the rights to buy 200,000 shares of BlackBerry stock at a strike price of $10 a share.

According to the report, Samsung proposed a range of $13.35 to $15.49 per share representing a premium of 38% to 60% over BlackBerry’s then trading price. The news led to a 30% surge in BlackBerry’s stock — the biggest gain for the company since 23 December 2003.

If the buyer of the said call options were able to sell them, the person could have made a profit of $490,000 on a $20,000 investment, according to Reuters.

The news agency added, citing a person familiar with the investigation that the SEC is probing if a source of information provided to it bought Blackberry options.

There is no indication that Reuters is a target of the investigation. A spokeswoman for Thomson Reuters declined to comment.

A spokesman for the SEC also declined to comment.