Attention Suspiciously Lucky Investors...

Did you recently make a killing on call options for DRS Technologies and American Power Conversion Corp.? Please call (888) 732-6585 immediately. The Securities and Exchange Commission would like to talk with you.

If you're the person the S.E.C. is looking for, you probably already know about the commission's interest, because agency investigators obtained an emergency order on Friday to freeze your assets.

The Commission contends that someone -- maybe you -- netted more than $3 million in profits by engaging in illegal insider trading based on nonpublic information about recent offers to acquire DRS and American Power Conversion.

The call options were bought and sold through an account with the increasingly beleaguered UBS, which is already fending off allegations of dodgy municipal bond sales, deceptive marketing of auction-rate securities, and aiding and abetting tax evasion. (All this and poor earnings, to boot.)

According to the S.E.C., the UBS account holder -- known for now simply as the Unknown Purchaser -- bought 1,820 out-of-the-money DRS call options for about $456,200 between April 29 and May 7 of this year.

As soon as the Wall Street Journal reported that Finmeccanica of Italy was in advanced talks to buy DRS, the Unknown Purchaser sold all the call options for more than $2 million. For those of you keeping score at home, that's a 300 percent return in a little more than a week.

Not surprisingly, that kind of payout caught regulators' attention; when they looked into the lucky UBS client's account, they discovered another bit of remarkable timing.

From September 21 to October 20, 2006, the Unknown Purchaser bought 2,830 American Power Conversion call options for about $343,000. When Schneider Electric of France said on October 30 that it planned to take over American Power Conversion, the Unknown Purchaser quickly sold the call options -- again, for more than $2 million. That was a four-fold gain.

Is it a coincidence that the acquiring companies in both cases were based in Europe and that the Unknown Purchaser traded through an account as a Swiss bank? If so, the Unknown Purchaser should remember to dial the international country calling code before reaching out to the S.E.C.

by Mark Stein

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