US probes options trade gained on Microsoft-Activision deal: Report

US Federal prosecutors and securities regulators are investigating large bets that Barry Diller, Alexander von Furstenberg and David Geffen made on Activision Blizzard shares in January, days before the videogame maker agreed to be acquired by Microsoft Corp, the Wall Street Journal reported on Tuesday (Mar 8).

IAC Chairman Diller, his stepson von Furstenberg, and music mogul Geffen have an unrealised profit of about US$60 million on the options trade, based on the recent Activision share price of around US$80, according to the report, citing people familiar with the matter.

The Justice Department is investigating whether any of the options trades violated insider-trading laws, the report said, adding that the Securities and Exchange Commission (SEC) is separately conducting a civil insider-trading investigation.

Diller told Reuters that none of them had any knowledge about a potential acquisition of Activision by Microsoft and that they acted simply on the belief that Activision was undervalued and therefore had the potential for going private or being acquired.

"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," he added in a statement.

Spokespersons for the Justice Department and the SEC did not respond to Reuters' request for comment, while von Furstenberg and Geffen could not be immediately reached.

In January, Microsoft announced plans to buy Activision the Call of Duty maker for US$68.7 billion in the biggest gaming industry deal in history.