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Early UUNet stock trading investigated

Authorities are investigating heavy trading of UUNet shares before its merger with MFS Communications.

The Chicago Board Options Exchange confirmed today that it has opened an investigation into heavy trading of UUNet before its merger with MFS Communications earlier this week, Reuters reported today.

The heavy trading of UUNet options started two days before the company was acquired by MFS for $2 billion. "All of the sudden everyone wanted these options," said Mike Frazin, a market maker at the Chicago board. "The volume exploded in these options on Friday's close and Monday's close."

Pre-merger buyers were well rewarded, as UUNet stock rallied on the Nasdaq market Tuesday to close at 58-3/4, up from 48-1/4 on Monday. UUNet closed today at 63.

The CBOE did not indicate how long the investigation would last.