This came across the Twitter-machine while I was sitting in the 8th Annual Carroll School Finance Conference this morning:
The Securities and Exchange Commission today announced an emergency court order to freeze the assets of a trader in Bangkok, Thailand, who made more than $3 million in profits by trading in advance of last week's announcement that Smithfield Foods agreed to a multi-billion dollar acquisition by China-based Shuanghui International Holdings.
OK, so this guy is an idiot of huge proportions. Why? Well, because he was asking to get caught. It's really, really awful. OK, so first and foremost. This guy doesn't have a trading account until May 10 when he opened one. It seems he was in quite a hurry to get started trading, too. According to the complaint:
On May 17, 2013, Rungruangnavarat e-mailed Interactive Brokers and inquired whether the account was open. Rungruangnavarat wrote: "Please let me know if the account opening is done, so i can start funding the account. I want to trade US options, so please confirm if my account is readily trad-able [sic]."
R. then funded the account to the tune of $2.92 million. He immediately started trading — however, only exclusively in Smithfield call options and futures. Nothing else. OK, so he's a little single minded.
And when R. traded, he swamped the market – making up almost 80% or so of all July 29 call options and 99%(!) of all July 30 call option trades cleared in the month of May. What?! That's right, he might as well have put a "kick me" sign on his butt. If that weren't enough, R. also purchases Smithfield futures. There his purchases were 100% of the total cleared market. Ugh. He cornered the market in Smithfield options and futures and made a 3,400% when the acquisition was announced.
OK, so maybe he is just a bright guy sitting in Bangkok with a good idea. Yeah, maybe. The SEC complaint drops this little tidbit:
Rungruangnavarat has a Facebook friend who is a former employee ofthe company where Rungruangnavarat works, and who is an associate director at the Thai investment bank that advised Charoen on its contemplated Smithfield bid.
Bit in the ass by Facebook. Idiot.
-bjmq