AnnTaylor Options Trades Before Forecast Said to Spur SEC Probe
By David Scheer and Jeff Kearns
Feb. 16 (Bloomberg) -- U.S. regulators are investigating whether traders tapped confidential information on AnnTaylor Stores Corp. before the women’s clothing retailer boosted its sales forecast, a person with direct knowledge of the inquiry said.
The Securities and Exchange Commission has identified people who bet on AnnTaylor stock before the company’s Feb. 2 announcement sent the shares up 18 percent, the person said, declining to be identified because the inquiry isn’t public. The agency hasn’t accused anyone of wrongdoing.
AnnTaylor spokeswoman Catherine Fisher and SEC spokesman John Heine declined to comment.
Bullish trading AnnTaylor stock options climbed to a 10- week high a day before the New York-based firm said it expected fiscal fourth-quarter net sales to approach $470 million. Of 5,766 contracts traded, 97 percent were March $15 calls, which more than tripled in value when the shares rose. The retailer previously forecasted sales to decline slightly from the $462.4 million it reported for the third quarter of 2009.
Call options convey the right to buy stock at a specified price by a certain date. The contracts can multiply in value when the underlying stock price increases, making them potentially more lucrative than directly buying the shares.
Well-timed surges in options trading have spurred multiple SEC investigations in the past year, leading to lawsuits against investors in companies including Perot Systems Corp. and Chattem Inc. The SEC is also examining trades in Airgas Inc.’s options before Air Products & Chemicals Inc. announced a takeover offer Feb. 5, a person with knowledge of that matter said last week.
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