Here’s Why the FBI is Involved in the Heinz Acquisition

The U.S. Securities and Exchange Commission began looking into the $23 billion acquisition of H.J. Heinz (NYSE:HNZ) last Friday, after an abnormal increase in options trading activity on Wednesday, the day before the deal was announced, drew the attention of federal regulators. On the same day that the investigation was launched, the SEC also initiated a lawsuit against “certain unknown traders” for allegedly participating in insider trading.

Now, the Federal Bureau of Investigation has opened its own inquiry, reported The New York Times on Tuesday. Since the federal government began pursuing insider trading over the past few years with greater zeal, the agency’s New York office has often contributed its manpower to related investigations.

Like the SEC — which froze a Swiss account linked to the suspected insider trading activity — the F.B.I has started examining the series well-timed options trades as well. These trades seemed unusual given the current market conditions, and there had been little activity in Heinz options for months before the deal was announced. But on Wednesday, total call options volume surged to 3,400, about four times the average volume of 820 per day. On the other side of the equation, just 249 put options were traded, about half their average volume. The volume disparity, falling just one day ahead of the announcement, is what set off warning bells at the various institutions that monitor options trading activity.

While analysts were generally bullish on the stock, there were no major indicators that the stock would be making any huge gains in the near future. However, a deal like acquisition of Heinz by Berkshire Hathaway (NYSE:BRKA)(NYSE:BRKB) and the investment firm 3G Capital, would naturally send shares, and the value of the options contracts, up drastically. And it did…