I'm not very surprised by this. Information gets spread very quickly for this type of activity, infact there are entire funds created around the merger arbitra

I'm not very surprised by this. Information gets spread very quickly for this type of activity, infact there are entire funds created around the merger arbitrage scene. Typically this information is told to a fund by the investment banker or company itself, and then the fund would become "restricted" on the company, meaning once they know a deal is in the works, they can't act on it until the deal has been reported. Funds know that they are being very closely watched. Some funds do cheat, ala SAC http://www.bloomberg.com/news/2014-04-10/sac-judge-approves-record-insider-trading-accord-with-u-s.html http://www.bloomberg.com/news/2014-04-10/sac-judge-approves-..., but the vast majority don't intentionally trade on the news. The article didn't mention it but I'd guess most insider trading happens form individual accounts and not funds. The risk reward just isn't really there for most funds, compared to individual investors.