If Diamond was being investigated for a 50 million "error" in their financial report, I would say this is a screaming buy. But when a board member who was on the audit committee kills himself, it sure makes me hesitate to buy. I suppose the guy could have been emotionally disturbed to begin with, and something in his private life pushed him over the edge. But it would have to be quite a coincidence for that to happen not long after the SEC got involved, don't you think? And if his suicide was a direct result of something he knew about within the company but did nothing, or worse, was part of it, then you have to wonder how bad it can be for someone to prefer death to the penalty.
I initially also thought that the suicide may have something to do the investigation but then I thought why ONLY him. He can't be the only one involved if there is any major fraud going on or if he is the only one involved then he's dead now, what more could they possibly do to him. It just doesn't make sense of why ONLY one person committed suicide assuming it was connected with this investigation matter. What about the others that may be involved? To go along with that thought, he was a member of the board of director...and he cannot be the only one in trouble if the board fails to "oversee" the company. Also it sounds unlikely that someone of his age would commit suicide so thoughlessly when every1 else is just sitting back and waiting to see how things play out. To put myself in Joe's shoes my thought would be "why would I commit suicide over this crap when every1 else is just relaxing and letting the SEC come in and check everything out?" There's got to be either no problem or problem that may or may not be found.
I appreciate the thought out response. You make valid points, but not everyone deals with stress the same. Look at Enron for example. several people were involved but only 1 committed suicide. Others went to prison. To most normal people, prison and fines are preferred over death. Look at Bernie Madoff. There's a guy who had all kinds of reasons to kill himself and yet it was his son who, by most accounts wasn't even involved, who killed himself over the shame of his father.
the company said the suicide is not connected to the investigation or you believe or no if the company lie than you must be in the short side if the company is telling the true than you must be in the long side
however best play here is call Mar and put Mar 10% out of the money
or go long with twice put option 5% out of the money big movement ahead