Hedge fund lawsuit stopped dirty tricks, says insurer
By Ben White in New York
Published: November 3 2006 02:00 | Last updated: November 3 2006 02:00
When Fairfax Financial, the Canadian insurer, launched a $5bn civil racketeering lawsuit against a group of prominent hedge funds, it seemed a company at the end of its tether at the aggressive short-selling that was driving down its shares.
Four months later, not only has Fairfax stock soared 36 per cent but the company's actions may set a precedent for other companies who feel victimised by the hard-nosed hedge funds.
Fairfax and its lawyers say that in addition to improving financial results, a big reason for the jump in its shares is that the lawsuit, launched last July, halted what they claim was a dirty tricks campaign against the company by hedge funds including SAC Capital Management and Exis Capital.
In the lawsuit, Fairfax claimed that the hedge funds generated bogus analyst reports critical of the company, sent threatening letters to Prem Watsa, Fairfax chief executive, and his friends and family, tried to intimidate employees into providing sensitive inside information and attempted to plant negative news stories about the company.
The hedge funds deny all of the allegations and are vigorously contesting the civil lawsuit, filed in New Jersey.
Fairfax asserts that the negative reports immediately declined following the lawsuit and the allegedly threatening behaviour also ceased. Two hedge fund operatives named in the lawsuit no longer answer phones at Exis Capital, where they once worked.
Fairfax's outside attorneys say that in the months since the lawsuit was filed they have been besieged with calls from corporate executives interested in pursuing similar lawsuits.
"What we have come to learn in doing our investigation and since we filed the suit is that this is a pervasive problem in the markets," said Marc Kasowitz, Fairfax attorney, who has filed a similar lawsuit on behalf of Canadian drugs group Biovail. "A number of companies have investigated how this market manipulation has been carried out against them," he added, continuing that it was "logical to expect" that more lawsuits would soon be filed.
Fairfax's 95-page complaint is packed with allegations, including that an operative working for the hedge funds sent a threatening package to Mr Watsa's pastor and paid ominous visits to Mr Watsa's home.
The suit also alleges that the hedge fund operatives tried to intimidate Fairfax's auditors.
Andrew Berry, an attorney for SAC, declined to comment on the assertion that the lawsuit had ended alleged dirty tricks. David Zensky, an attorney for Exis, also declined to comment.
加拿大保险公司诉对冲基金“打压股价”似已奏效
英国《金融时报》本?怀特(Ben White)纽约报道
2006年11月3日 星期五
当加拿大保险公司Fairfax Financial在几个月前提起一宗民事敲诈诉讼，向一些著名的对冲基金索赔50亿美元时，该公司似乎已经无计可施，面对大规模的卖空行为拉低了公司股价，只能出此下策。
但在4个月之后，Fairfax的股价已经飙升了36%。与此同时，对于那些感觉自己受到咄咄逼人的对冲基金敲诈的公司而言，Fairfax的行动还可能为它们开创了一个先例。
Fairfax及其律师表示，除了财务业绩有所改善以外，公司股价跃升的一个重要原因，就是今年7月提起的诉讼，制止了对冲基金实施的、被该公司称为“肮脏伎俩”的攻势。对该公司发动这种攻势的对冲基金包括SAC Capital Management和Exis Capital。
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Fairfax在诉讼中声称，对冲基金制造了对该公司不利的虚假分析报告，向Fairfax首席执行官普雷姆?沃特萨(Prem Watsa)及其家属和亲友发出了恐吓信，试图胁迫雇员提供敏感的内部信息，并有意炮制有关该公司的负面新闻。
被起诉的几家对冲基金否认了全部指控，并正进行激烈辩驳。这项民事诉讼是在美国新泽西州提起的。
