U.S. regulator the Securities and Exchange Commission is to investigate a suspicious surge in trading activity in the run up to Kohlberg, Kravis, Roberts and Texas Pacific's $45 billion buyout of U.S. power producer TXU (TXU), The Times of London reports Tuesday.
The investigation will focus on a surge in trading of call options in TXU shares in the hours before news of the buyout leaked to the public after markets closed Friday. The investigation will begin informally but could lead to a structured inquiry.
Call options that allow the holder to buy shares in TXU at $60 on March 16 jumped from $0.60 to $1.55 Friday. Calls to buy shares at $57.50 jumped from $1.45 to $2.85 over the same period.
