So -- FBI Raided Hedge Fund Offices Yesterday. Goldman Next?

It has long been known that the SEC, DoJ and FBI suspect insider trading (and the predicate "tipping" of material non-public information) occured in the early days of March, 2009 -- related to both Merck's stock, and Schering-Plough's stock. Both saw significant run-ups (not tied to any then-published news), and astonishingly high "out-of-the-money" call option purchasing, prior to the announcement on March 9, 2009 -- of a bust-up, styled as a reverse merger.

It is significant that Goldman, Sachs & Co. signed Schering-Plough's financial "fairness opinion" on that deal. Goldman's bankers thus had immense access to an unprecedented array of non-public, material inside information -- about Schering-Plough -- and the various competing structural alternatives for the deal (and to a lesser extent, about Merck itself).

Many published reports now indicate that Goldman is suspected of leaking some of that information in the early days of March 2009. I suspect the leak was closer to Kenilworth, than Wall & Broad. As I've repeatedly written, I do suspect some executives at Goldman's client -- legacy Schering-Plough -- may turn out to be (at least one of the sources of) that leak.

To be clear, no one at the SEC, DoJ or FBI has said either company is a target -- nor any of the officers of each. Time -- and the soon-to-be unsealed indictments -- will tell. Here is a bit of David Moenning's much longer report of this morning -- writing in SeekingAlpha -- do go read it all:

. . . .According to people close to the situation, the investigation will be the largest probe the industry has ever seen. . . .

The criminal and civil probes will be investigating whether multiple insider-trading rings cashed in illegal profits tallying in the tens of millions of dollars. It is possible that some charges could be brought before the end of the year, according to people familiar with the situation. . . .

Another focus of the investigation is determining whether or not Goldman Sachs bankers leaked information about transactions, including mergers of health care companies, to benefit certain investors. . . .

The investigation is ongoing, led by federal prosecutors in New York, the FBI, and the SEC. . . .

Stay tuned. This -- a fight between rats, ratting one another out, could explain why -- earlier than any other Wall Street firm, Goldman suddenly turned decidely negative on the merger's benefits, and downgraded Merck two notches, in early May, 2010. Many others followed, but not until months later.

To be clear -- I do think Goldman's opinion was, and is, correct. The merger is disappointing. I just wonder if animus motivated some of that opinion -- at least in the early stages -- late April 2010. We'll soon see.