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Avenatti, whose client Gary Franklin accused Nike of making and trying to conceal illegal payments to top basketball recruits, conducted Google searches related to "insider trading" and "nike put options" and visited the Nasdaq's website to look into the pricing of those instruments, a motion letter sent to the court showed.
The internet searches were conducted on March 10, 2019, less than two weeks before he was arrested and charged with federal extortion and bank and wire fraud. He has plead "not guilty" to the charges. Avenatti did not trade Nike stock and has not been charged with insider trading.
In a letter to Judge Paul Gardephe, Avenatti attorney Scott Srebnick said the internet searches are "irrelevant" and that the "unfair prejudice from its introduction would substantially outweigh any prohibitive value." He asked that the government not be allowed to refer to the evidence in its opening statement.
A put option is a contract that gives the owner the right, but not the obligation, to sell a security at a specific price by a certain date. The price at which the security can be sold at is called the "strike price." It is unclear what strike prices Avenatti was searching, so it cannot be determined if they would have panned out.
Nike shares closed at $82.33 a piece on March 25, the day Avenatti tweeted that he would be "holding a press conference to disclose a major high school/college basketball scandal perpetrated by @Nike."
Nike shares rallied by more than 8 percent over the following four weeks, closing at $89.20 on April 18 before falling by 13.5 percent to $77.14 on May 31. Since then, shares have gained more than 32 percent.
Jury selection for Avenatti's trial begins on Monday. The trial was supposed to start last week, but was delayed when Avenatti was arrested in connection to another case.