Steven Cohen, SAC must again face Fairfax short-selling lawsuit - Reuters

[dr.malone]

I asked Paul Rivett last week at the meeting where we stood on this and he said he thought they were gonna get the ruling like 6 months ago. He said if they lost, it was likely over. Well, I guess we didn't lose and its back on!!  :)

 

April 27 (Reuters) - The billionaire Steven A. Cohen must again face a lawsuit accusing him and his former firm SAC Capital Advisors LP of conspiring with other hedge funds to spread false rumors about Fairfax Financial Holdings Ltd to drive down its stock price.

 

A three-judge panel of a New Jersey state appeals court on Thursday revived conspiracy, disparagement and other claims that had been dismissed in 2011 and 2012 against several defendants in the Toronto-based insurer's $8 billion lawsuit.

 

But it upheld the dismissal of claims against two prominent hedge fund firms, Jim Chanos' Kynikos Associates PC and Daniel Loeb's Third Point LLC, and racketeering claims against all defendants, including Cohen and SAC.

 

Fairfax claimed it was a victim of a four-year "bear raid" in which the hedge funds campaigned to manufacture bogus accounting claims and biased analyst research, and persuaded reporters to write negative stories.

 

It said this was designed to generate profits from short sales, and ultimately "crush" or "kill" the company.

 

In a 156-page decision likening the 11-year-old case and its millions of pages of documents to a "fearsome" lion, Judge Clarkson Fisher said the trial judge was too quick to find no evidence of wrongful intent by SAC, whose trading "gave it financial goals aligned with the alleged conspiracy."

 

He also said SAC's alleged trading strategy was "further illuminated" by the firm's 2013 guilty plea to criminal insider trading and payment of $1.8 billion in related settlements.

 

Fairfax was also allowed to pursue some claims against hedge fund Exis Capital Management Inc and Morgan Keegan, a brokerage that issued research about the company and its New Jersey-based Crum & Forster commercial insurance unit.

 

But the New Jersey court said the racketeering claims must be dismissed because they would not be permitted in New York, where most of the alleged misconduct took place.

 

It also said it lacked personal jurisdiction over Kynikos, Chanos, Third Point and Loeb, which are all from New York.

 

After SAC pleaded guilty, Cohen converted the firm into a family office, Point72 Asset Management LP.

 

Fairfax and its law firm said they were reviewing the decision. Spokespeople for Cohen and Loeb and a lawyer for Exis did not immediately respond to requests for comment.

 

Raymond James Financial Inc, which bought Morgan Keegan from Regions Financial Corp In 2012, declined to comment.

 

Stewart Aaron, a lawyer for Kynikos and Chanos, said they were "gratified by the court's well-reasoned decision."

 

The case is Fairfax Financial Holdings Ltd et al v. SAC Capital Management LLC et al, Superior Court of New Jersey, Appellate Division, No. A-0963-12T1. (Reporting by Jonathan Stempel in New York; Editing by Andrew Hay)

[Parsad]

The funny thing is how Chanos and Loeb responded to the decision...that they were gratified by the court's well-reasoned decision.  That decision only occurred because the New Jersey court had no jurisdiction over them...not that they were innocent of such claims.  Cheers!

[Viking]

This certainly brings back a lot of memories. While very painful at the time for Fairfax Financial the wicked stock swings certainly benefitted some investors.

[Guest longinvestor]

This certainly brings back a lot of memories. While very painful at the time for Fairfax Financial the wicked stock swings certainly benefitted some investors.

 

Yep! I have one account which still has just a few shares of FFH which I bought in 2003 right at the height of those swings. It was wild indeed. Nice to make a buck off of the sleazeballs for a change. 

[bsilly]

Interestingly I just saw a clip of former Rocker Partner, turned chicken farmer, Marc Cohodes on BNN talking about Home Capital today & was reminded of our adventures with his ilk.

[Parsad]

If any of us were smart, we would have written the show "Billions" based on what happened, instead of Andrew Ross Sorkin beating us all to the punch.  As good as that show is, I don't think they've still touched on many things we've seen that would easily fit into a season's worth of episodes.  Cheers!