Global articles on espionage, spying, bugs, and other interesting topics.

Qualcomm-Atheros: No Insider Trading Here

By Stephen Grocer

Seems Qualcomm’s bid to buy Atheros was one piece of information about Atheros that didn’t leaked.

Atheros and other semiconductor companies such as AMD, Marvell Technology, Broadcom and Intel have been embroiled in the insider trader probes the past two years.

Atheros’s name has come up twice, in fact. One of its executives tipped hedge fund manager Ali Far to the firm’s financial performance for the fiscal quarter ended in December 2008. In the spearate but related “expert network” probe, Don Ching Trang Chu, an employee at Primary Global Research, allegedly provided inside information about Atheros directly to Richard Choo-Beng Lee, who was a cooperating witness in the Galleon case and co-founded Spherix Capital with Far.

So was there any suspicious Atheros trading before last week’s deal?

The short answer: No.

Atheros’s shares opened the day at $37.14 and were trading at $37.18 at 3 p.m. when the New York Times broke the news of an impending deal. As the chart below shows, it shares did not surge until after the news came out. Often in recent years, there is a jump in shares of a target company in the days before a transaction is announced.  For example, Merck’s acquisition of Schering-Plough. Shares and options, which had been languishing for more than a year, had spikes in the days before the $32.6 billion offer.

What about the options market? Deal Journal colleague Brendan Conway reports

In the stock-options market, the big Atheros action came only after the first reports of the deal. There were dribs and drabs of trading activity Monday and then a tidal wave of volume on Tuesday afternoon that continued into Wednesday.

In the options market, a favorite venue for traders who make speculative takeover bets, it’s always possible that some of the dribs were the work of traders acting on inside information. But, as in the stock market, market participants weren’t crying foul the way they often do when others have acted illegally on their knowledge.