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Diller’s options bet on Activision investigated by U.S., report says

A sign that says Activision and Blizzard
Microsoft is buying Activision Blizzard for $68.7 billion.
(Jae C. Hong / Associated Press)
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Federal prosecutors and U.S. securities regulators are investigating options trades on Activision Blizzard Inc. made by Barry Diller and others in advance of the announcement of the video game company’s acquisition by Microsoft Corp., the Wall Street Journal reported, citing people familiar with the matter.

IAC/InterActiveCorp Chairman Diller, entertainment executive David Geffen and Diller’s stepson Alexander von Furstenberg bought options to purchase Activision shares at $40 each on Jan. 14 in transactions privately arranged by JPMorgan Chase & Co., the newspaper said.

Activision shares were trading at about $63 at the time, according to the report. Microsoft announced on Jan. 18 it had agreed to purchase the game developer for $68.7 billion.

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The U.S. Department of Justice and Securities and Exchange Commission are investigating whether any of the options trades violated insider-trading laws, the Journal reported, citing unidentified people familiar with the matter.

Diller said he has been contacted by regulators and called the decision to purchase the options “a lucky bet,” the newspaper said.

The three men have made an unrealized profit of about $60 million on the options trade, based on Activision’s recent share price, according to the Journal.

A representative for Geffen couldn’t immediately be reached.

In a statement, Diller said: “None of us had any knowledge from any person or any source or any anything about a potential acquisition of Activision by Microsoft. We acted simply on the belief that Activision was undervalued and therefore had the potential for going private or being acquired. And, if we had any such information we would never have traded on it — it strains credulity to believe we would have done so three days before Microsoft and Activision made their announcement.”

Diller also serves as chairman of Expedia Group Inc.

Spokespeople for the SEC and Justice Department didn’t immediately respond to requests for comment. JPMorgan declined to comment.

Times staff writer Ryan Faughnder contributed to this report.

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