According to the report, the trio purchased shares at $40 each in privately arranged transactions (they were trading at around $63 at the time). Days later, the announcement was made that Microsoft planned to buy Activision Blizzard at a price of $80 per share, effectively doubling the men’s investment.
If the acquisition is completed, the three stand to make a profit of around $60 million, but according to the WSJ’s sources the Justice Department and the Securities and Exchange Commission are investigating whether insider trading laws were broken.
The WSJ claims that all three men were connected in some way, and that through this connection they had access to Activision Blizzard CEO Bobby Kotick.
Geffen is also a long-time friend of Diller – the pair are described by the WSJ as “entertainment-industry moguls who once worked together in the mail room at the William Morris agency” – and once told Forbes that “I’ve never seen [Diller] be anything but successful, to bet against him would be a fool’s errand”.
Despite the investigation and the apparent links to Kotick, Diller told the WSJ that the trio had no insider information about the Microsoft acquisition.
“It was simply a lucky bet,” he claimed. “We acted on no information of any kind from anyone. It is one of those coincidences.”