re: Macquarie Hedging
1. It would seem that this would clearly fall within the scope of insider trading. A pending settlement that you are a party to would clearly be material non-public information. That's not to say that news of the settlement couldn't have been leaked, and friendly associates of Macquarie could be trading on it (even though that would also be illegal - but also harder to connect/track).
2. With ~90 million shares issued, the 5% threshold limits ownership to ~4.5 million shares. Even if Macquarie topped out with a full 5%, they are still looking at only about a ~5% return of their Settlement liability. It's not much of a hedge unless they are buying on significant leverage or some other kind of vehicle. For example if the settlement was $180 million (much more than I expect), that represents $2/share. Presume the share price increases $2/share, and Macquarie sells. With 4.5 million shares, that's $9 million profit. But they paid $180 million in this example, so it's not a great return even if legal. Although I admit, $9 million in profit is more than enough to pad the bonus for a few of their traders.
3. If I had to guess, this is just some folks with deep pockets who saw the settlement stuff posted to the court site, just like Denny. And they acted on it, because they think they can make a few bucks off the news. And maybe, or probably, some of them were able to get some inside baseball from someone familiar with the negotiations. That's not legal, but I'd guess not that uncommon either. As my college roommate retorted to our Intermediate Accounting professor when insider trading came up in class, "yeah but the reality is that insider trading is really hard to detect in small positions and stocks traded on the pink sheets." My roommate went on to be a trader at AIG, hahaha.
AI
