By Katherine Sayre, Jeffrey A. Trachtenberg and Dave Michaels
Securities regulators have ended an investigation into large bets that Barry Diller, Alexander von Furstenberg and David Geffen made on Activision Blizzard days before the videogame company agreed to be acquired by Microsoft in 2022.
The Securities and Exchange Commission this week sent letters to Diller, von Furstenberg and Geffen saying it doesn't plan to accuse them of insider trading tied to their purchase of Activision options.
The Justice Department also investigated whether the men's trades violated insider-trading laws, the Journal reported at the time. A lawyer for Diller said he hadn't received follow-up inquiries from the Justice Department since 2022.
In January 2022, Diller, von Furstenberg and Geffen bought options to purchase Activision shares at $40 each in privately arranged transactions through JPMorgan Chase & Co., the Journal reported. Activision shares were trading around $63 at the time, meaning the options were already profitable to exercise, or "in the money." Option holders could reap more if Activision's stock price rose.
The men had unrealized profits of tens of millions of dollars when the deal was announced.
Diller said at the time that none of the men had any material nonpublic information about the Microsoft-Activision deal, and the purchase was "simply a lucky bet."
"There was no insider trading and nobody acted on any insider information," Diller said Wednesday. "The investigation showed that."
Former Activision CEO Bobby Kotick, who was also part of the SEC investigation, received a letter saying the matter was closed and no enforcement actions would be taken, according to people familiar with the matter.
Microsoft closed its $75 billion acquisition of Activision late last year. It was Microsoft's biggest deal ever and took nearly two years to clear a number of global regulatory hurdles.
For Diller, the federal scrutiny complicated his pursuit of a gaming license needed in Nevada. His IAC/Interactive Corp. is the largest shareholder in Las Vegas-based casino company MGM Resorts with a roughly 20% stake, and Diller is a member of MGM Resorts' board of directors.
State regulators look into the backgrounds of executives and major shareholders in casino companies to determine a person's "suitability" to work in the industry. The state's regulations are intended to prevent corruption or criminal activity in the industry.
Nevada gambling regulators in 2022 issued Diller a license limited to two years. Diller could apply for a full license after that time period, or return sooner if the investigation was settled before then.
On Wednesday, the Nevada Gaming Control Board voted to recommend an unlimited license for Diller, who presented the board with a letter that the SEC investigation had ended. The board required Diller to notify state regulators within 48 hours of any updates or further inquiries from the Justice Department and SEC regarding the matter.
The Nevada Gaming Commission, which oversees the board, must give final approval of the license. The commission is scheduled to meet May 16.
(END) Dow Jones Newswires
May 02, 2024 11:37 ET (15:37 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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