Jim Cramer came onto MAD MONEY tonight saying he thinks that Total Systems Services Inc. (NYSE: TSS) is one that can be taken over next in a sector and $40 would be a fair price based on Alliance Data prices. Synovus Financial Corp. (NYSE: SNV) is the parent and Third Point is now being an activist investor. The earnings growth of 18% is reason enough to own this. Cramer did note that he is concerned that Automatic Data Processing Inc. (NYSE: ADP) might be acquired first.

Before you trust Cramer, there are some other instances to look at: Alliance Data Systems (NYSE: ADS) was just acquired, First Data Corp. (NYSE: FDC) is going private, and even Bisys Group Inc. (NYSE: BSG) got gobbled up. Keep in mind that some of the premiums in this sector have been small. ADS was nearly a 20% stock jump, but BSG was a horrible low-premium buyout. In making any "buyout projections" you really need to make sure that these stocks are ones you want to own on your own. Picking a company for a buyout just "for the speculation of a buyout" is a strategy that can be more than painful regardless of how nutty private equity deals get.

The U.S.'s largest bank Citigroup (NYSE: C) announced its intention to acquire BISYS Group (NYSE: BSG) for $1.47 billion. The deal is expected to close in the second half of the year. It's a smart move for Citigroup. The company has been attempting to lead the industry in servicing and administrating several types of hedge funds, mutual funds etc.

Bisys Group built its business over the years by offering its customers the total package of administrating and organizing all necessary paperwork and reporting forms for its fund holders. Recently, Bisys Group has fallen on hard times as its business has stalled. In late 2002, the shares were trading as high as $37 and reached a low of $7.92 in the past 52-weeks. The take-out price of $11.85 seems quite fair.

Citigroup is making inroads in the servicing aspects to the alternative-hedge fund market. The hedge fund industry has several thousand players, with new ones opening every month. The offshoot for Citigroup is that Bisys Group has sophisticated technology and systems that will fit right in to the Citigroup systems. Any transition issues should be minor.

Bisys Group has two major divisions, insurance services and the investment services division. Citigroup will immediately sell off the insurance services division to J.C. Flowers & Co. thus reducing the acquisition cost to $800 million. There will be no effect to Citigroup's earnings estimates for 2007 or 2008. The deal is neutral to earnings.

Citigroup was rumored to be looking at Bisys to expand its tentacles into the lucrative services industry. It's a good, strategic move for Citigroup as it expands its foothold in the services sector.

Georges Yared is the CIO of Yared Investment Research where he explores more growth stock ideas.

Note: The Daily Option Update is provided by Stock Options Specialist Paul Foster of theflyonthewall.com.

Volatility Index S&P 500 Options-VIX is down 2.88 to 16.75

BISYS-BSG option volume & volatility indicates; Strategic Announcement expected. BSG provides outsourcing services to more than 22,000 financial institutions and corporations. BSG announced on 8/10/06 "it has initiated a process to explore strategic alternatives as part of its continued effort to maximize shareholder value." BSG call option volume of 5,394 contracts compares to put volume of 816 contracts. BSG April option implied volatility of 41 is above its 26-week average of 35 according to Track Data, suggesting larger risk.

New Century Fin'l-NEW option implied volatility is expensive on price Fluctuations. NEW, a real estate investment trust, providing mortgage products to borrowers, is recently trading up $1.44 to $5.98. NEW call option volume of 22,283 contracts compares to put volume of 52,189 contracts. NEW April option implied volatility is near 200 according to Track Data, suggesting large price fluctuations.

Option volume leaders today were: Haliburton (NYSE-HAL), Citigroup (NYSE-C), Altria (NYSE-MO) & Bristol Meyers (NYSE-BMY).

The Wall Street Journal reports today that twenty-seven mutual fund companies will be the focus of a new SEC investigation seeking to find out if they accepted millions of dollars in kickbacks from their service companies. This new probe was started after Bisys Group, which provides administrative services to numerous mutual fund companies, settled its kickback case with the SEC. In that case, the SEC said that Bisys paid a total of $230 million in kickbacks between July 1999 and June 2004 to win contracts from mutual funds for its services.

"Receiving a kickback that comes indirectly out of the pockets of shareholders is the functional equivalent of embezzlement," Mercer Bullard, a law professor at the University of Mississippi told the Wall Street Journal. Bullard is the founder and president of Fund Democracy and champion for mutual fund shareholders everywhere. He's led the charge for years to make mutual fund board members more independent, which is the only way scandals like this one can be prevented. In fact according to the Wall Street Journal story today the kickbacks were arranged in side agreements and were hid from mutual fund investors and independent board members.

The Journal story talks about "Advisor A" who allegedly demanded millions of dollars from Bisys in return for a recommendation to the mutual fund board members that the Bisys contract should be renewed. The SEC claims in its complaint the money was used primarily to pay "Advisor A's" marketing costs, but also some of it went to pay for the initiation fee and monthly dues at a country club.

Most of the major mutual fund companies won't be pulled into this scandal because they tend to have their own in-house units to carry out administrative functions. The twenty-seven mutual funds involved in this scandal will primarily be small mutual fund companies, but some banks are expected to get caught up in this probe as well.