"I say cheating is the gift man gives himself!" -- C. Montgomery Burns

Today, there's an interesting article in the St. Louis Post-Dispatch that points to a rather curious incident. On Tuesday, we found out that Tenaris (NYSE:TS) was going to take Maverick Tube (NYSE:MVK) at $65 a share.

Here's what's odd. On the three days preceding the announcement, July call options on Maverick with a $60 strike (which were way out of the money at that point) traded more than 1,000 contracts per day.

Why is that curious? Because the average volume before then was about 100 contracts per day. What's that mean? Simple. Either you believe in miracles, or someone leaked the word, and a few lucky (or is that slimy?) traders made a killing on these options, as much as seven times their money in three days.

Of course, it's entirely possible, even probable, that some of this options action simply reflects the activity of sharp-eyed copycats without inside information -- folks who just saw the flurry of activity and figured something had to be going on. But its pretty obvious that the originators of the stampede were trading on inside knowledge of that deal. And that, alas, is against the law, in addition to being as scummy as it gets.

If this sounds familiar, it is. Last year, the SEC noticed some funny call-option trading around the buyout of Reebok by Adidas-Solomon, the beneficiary of which was a woman in Croatia. How weird was that?

Pretty weird, really. More strange than you could imagine. The full extent of the case, which allegedly involved researchers and analysts from Goldman Sachs (NYSE:GS) and Merrill Lynch (NYSE:MER), is laid out in this complaint. Yeah, it's a PDF, but be sure to read it. It details how the ringleaders of the scheme, guys named David Pajcin and Eugene Plotkin, collected inside information on potential mergers for companies like Duke Energy (NYSE:DUK), Celgene (NASDAQ:CELG), and Gillette, which went to Procter & Gamble (NYSE:PG). Their total take: more than $6.4 million. But it didn't stop there. Oh, no.

According to the complaint, they actually placed online ads in order to find their accomplices. They hoped to recruit investment bankers for the insider info, as well as strippers who, they figured, could wheedle information out of those upstanding Wall Streeters who head to the nudie bar after a long, hard week of capitalistic endeavor.

They eventually recruited a pair of accomplices to infiltrate a Wisconsin printing plant that stamped out Business Week magazine in order to front run the "Inside Wall Street" column. This scheme, according to the SEC, allowed them to flip stocks for about $350,000 in profits. These guys were brazen enough to trade the stocks and options in their own accounts before expanding and bringing in an aunt's account, as well as one belonging to a stripper.

In other words, it's Wall Street in all its sleazy, stereotypical glory.

And its stupidity.

These people left a paper trail a mile wide, and you can bet the Maverick Tube traders did the same. I look forward to seeing them go down.

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Seth Jayson has no patience for cheats. At the time of publication, he had no positions in any company mentioned here. View his stock holdings and Fool profile here. Fool rules are here.