Run-Up of Grumman Options Stirs Insider-Trading Probes

Heavy trading in Grumman Corp. stock options that took place before Monday’s announcement of a $1.9-billion merger with Martin Marietta Corp. has Wall Street once again whispering about insider trading.

Grumman options that sold for about $50 a contract before the deal soared to more than $900 after the announcement of the Martin Marietta deal.

Other options were worth $1,400 after the news, compared to $250 or less before. What aroused suspicion, however, was the dramatic increase in volume in the options.

Grumman’s common shares jumped $3.125 on Friday. On Monday, they soared $14.25 to $54.125 on the merger news. On Tuesday, Grumman rose 12.5 cents to $54.25.

A spokesman for Grumman said the Securities and Exchange Commission is investigating and that Grumman is cooperating. The Chicago Board Options Exchange said it is conducting a “routine investigation.”

Martin Marietta said it was unaware of any evidence of improper trading by its employees. Federal laws prohibit trading on material information that has not been made public.