Nov. 16 (Bloomberg) -- Bullish bets on 3Com Corp. options four hours before Hewlett-Packard Co.’s bid for the maker of computer-networking equipment are being investigated by regulators, according to a person familiar with the matter.

3Com call trading jumped to a 26-month high on Nov. 11, when Hewlett’s $2.7 billion takeover was disclosed after exchanges closed for the day. The Securities and Exchange Commission is examining whether someone used advance knowledge of Hewlett’s offer to illegally profit from the surge in 3Com’s stock when the deal was announced, according to the person, who declined to be identified because the inquiry isn’t public.

“It screams insider trading to the SEC,” said Peter Henning, a law professor at Wayne State University in Detroit and former SEC attorney.

Call options that convey the right to acquire stock for a given price by a certain date usually offer higher returns to traders speculating on takeovers. The U.S. Securities and Exchange Commission polices the options market to ensure investors aren’t engaging in insider trading.

SEC spokesman John Nester, Hewlett’s David Shane and 3Com’s John Vincenzo declined to comment.

$5 Calls

More than 8,000 3Com calls changed hands on Nov. 11, 17 times the four-week average. The most active were contracts conveying the right to purchase shares for $5 through Nov. 20, followed by December $5 calls. 3Com, based in Marlborough, Massachusetts, rose 5.2 percent, the most since Sept. 28, to $5.69 in Nasdaq Stock Market composite trading on Nov. 11 prior to the announcement.

Almost 4,000 of the November $5 calls and 3,300 December $5 calls traded, with almost all of the transactions occurring at noon. That compares with a total of six puts giving the right to sell 3Com shares. Palo Alto, California-based Hewlett-Packard, the world’s largest personal-computer maker, agreed to pay $7.90 a share in cash for 3Com, a 39 percent premium to the closing price on Nov. 11. The stock closed at $7.50 today.

“It looks like very unusual call buying,” Stefen Choy, founder of Livevol Inc., a San Francisco-based provider of options market data and analytics, said on Nov. 11. “I see this very frequently when there’s a takeover.”

Perot Systems

The SEC sued an employee at former presidential candidate H. Ross Perot’s investment adviser in September for buying options with advance knowledge of Dell Inc.’s $3.9 billion bid for Perot Systems Corp.

In the Perot case, the SEC filed a lawsuit against Reza Saleh two days after Dell’s acquisition was announced. He allegedly reaped an $8.6 million profit buying call options less than three weeks before Dell’s biggest-ever deal, according to the regulator. Saleh worked at Parkcentral Capital Management LP and Perot Investments, which have affiliations and share space with Perot Systems, giving him access to information about the company, the SEC said.

There was no response to messages left at a phone number listed on Internet directories for Saleh in Richardson, Texas, which the SEC identified as his hometown. His lawyers, Terence J. Hart and Patrick K. Craine at Bracewell & Giuliani LLP in Dallas, didn’t immediately return messages seeking comment.

To contact the reporters on this story: David Scheer in New York at dscheer@bloomberg.net; Jeff Kearns in New York at jkearns3@bloomberg.net.

Last Updated: November 16, 2009 16:51 EST