As the rest of the market tumbled in the last 10 minutes of trading on Tuesday, Goldman Sachs’ (GS) share price curiously rose more than $5, from $119.53 at 3:50 p.m. to $125.05 at the close. Two hours later, Warren Buffett’s $5 billion investment in Goldman was announced, which has led to Goldman’s stock jumping up 6% thus far, Reuters reports.
“Obviously someone knew the Buffett news that was coming out. I noticed it yesterday and I was telling my colleagues something is going on with Goldman,” said Dave Rovelli, managing director of US Equity Trading at Canaccord Adams in New York. “Someone is going to get caught, because that is easy to track, they can find out who did that,” said Rovelli.
Tracking those who knew of the news in advance may be even easier in this case because the idea for Buffett’s investment was not hatched until early Tuesday afternoon, according to the Financial Times, and was a “closely held secret with less than 20 people involved.”
Reuters reports that the SEC declined to comment on whether the incident is being investigated, although the SEC routinely looks into unusual activity preceding material news announcements.