By Jane Sasseen, February 25, 2010, Bloomberg
“One shareholder avoided much of that drop: the CEO. On June 19, the day the stock peaked, Olsen contracted with an investment bank to hedge 150,000 shares—a quarter of his stock in the company—against losses if the price fell below 18. As part of the complex maneuver, he agreed to sell his shares to the bank one year later and got an advance of $2.2 million. Olsen, who disclosed his hedging in public filings, declined to comment for this story”. To facilitate this transaction, the banker would immediately short the stock, then buy a call to protect themselves from further appreciation. They make money by charging a fee, while also potentially attracting new customers”. Read more
From “Insider Trading in Derivative Securities: An Empirical Examination of the Use of Zero-Cost Collars and Equity Swaps by Corporate Insiders”.
Another example. This is in Canada though, and I’m not sure if you are allowed to swap restricted shares in the United States. Still an interesting example nonetheless.
Some more examples