The New York Stock Exchange said Monday that it is conducting a routine analysis of trading in the stock of American Broadcasting Cos. and other media companies because the price and volume of those stocks advanced so dramatically last week.
ABC announced last Monday that it would merge with Capital Cities Communications in a $3.5-billion deal.
"When that analysis is completed, we determine whether an investigation is warranted," said Richard Torrenzano, vice president of the exchange.
Such procedures are used to look for indications that investors might have profited unfairly--and illegally--from advance knowledge about company developments.
In accordance with Securities and Exchange Commission policy, spokesman Harold Green declined to say whether the SEC was conducting an investigation into the trading of any media stocks.
Cable News Network reported that the SEC and the Pacific Stock Exchange in San Francisco have begun investigations into possible insider trading involving the Capital Cities-ABC merger.
Quoting unidentified sources, CNN said the investigations were sparked "by what was called the significant volume of trading" of ABC stock and options in the week before the companies' announcement.
David Semak, director of surveillance at the Pacific Stock Exchange, declined comment on the CNN report.
Torrenzano said it would take the Big Board a couple of weeks to determine whether it would conduct an investigation. He added that the exchange would not announce its decision or comment further.
The exchange normally conducts such an analysis when the volume or the price of a certain stock changes significantly, Torrenzano said. "All the media stocks advanced last week. We will do an analysis of all of them."
ABC's stock did increase in price and volume before the merger was announced, he said. The analysis will take into account several weeks' trading, he said.