I think they were primarily a victim of their massive success. If they had only made $500,000 instead of $2.8 million, they might still be going along fine.
How did they get caught? Did the SEC see this account has 1,800% return on investment over 3 years and investigate who owned it? Or did Capital One discover some odd queries on their production database and report them to the SEC?
I think generally it's the large unhedged options position that makes 10x after an earnings surprise that gets noticed. To your point, yes I think in this case pigs got slaughtered.
How did they get caught? Did the SEC see this account has 1,800% return on investment over 3 years and investigate who owned it? Or did Capital One discover some odd queries on their production database and report them to the SEC?