The snickers over Elliott Management’s fight with the government of Argentina just grew from inside the hedge fund community into the hallowed halls of the US Supreme Court, which heard the case today.
Initial victory in information aspect of case seems likely
On Monday, US Supreme Court justices provided indication that creditors have a right to seek limited information about Argentina’s non-US assets. The case stems from a 2001 investment Elliott made into Argentine bonds. After the bonds defaulted, Elliott and a small group of investors refused a payment near $0.30 on the dollar.
The U.S. Federal Reserve is treading carefully with raising rates amid the widespread economic, macro and geopolitical uncertainties sweeping around the world. The Fed raised its target level as high as 20% in the early 1980s to deal with runaway inflation, but we're a far cry from that today — a time when inflation threatens Read More
The holdout investors, most notably Elliott, engaged in a humorous game of attempting to repossess assets from Argentina like a reality TV show might dog a convict who escapes their bond obligation. At one point an attempt was made by a separate investor to seize the president of Argentina’s plane as it refueled with the president inside. Then Elliott unsuccessfully attempted to seize an Argentine naval vessel off the coast of Ghana. After taking control of the ship, it was eventually released back into the ocean. Elliott has also attempted to seize assets in a rocket program the Latin American nation was involved in.
The humorous tone to the case surfaced in the Supreme Court hearing, as reported by CNBC’s Kate Kelly. When musing over why other nations didn’t join Argentina in an Amicus brief supporting the nation’s position, Justice Antonin Scalia quipped that perhaps Argentina owed other nations as well, which was followed by insider laughter from the courtroom. It is interesting to note that France, which filed an Amicus brief in a lower case, did not file one in this higher profile case. Elliott currently is involved with the French government in an unusual insider trading case. Mexico and Brazil, which had also showed support for Argentina, stayed on the sidelines as well.
Two issues before Supreme Court
There are two issues involving Elliott and its NML Capital hedge fund subsidiary and Argentina. Today’s deliberation was about the ability of the hedge fund to subpoena for information about Argentina’s non-US assets. Elliott has issued subpoenas to Bank of America and Banco de la Nacion Argentina for financial information in the case.
The more contentious issue has yet to be heard, that being Argentina’s appeal of a lower court ruling in favor of Elliott ordering the South American nation to pay up to $1.33 billion.
Chief Justice John Roberts and Justice Anthony Kennedy seemed to seek limits on Elliott’s plan, while Roberts described what Elliott wanted as “pretty extraordinary.”
When asked if Elliott insiders had difficulty holding back a grin during the court hearing today, a source inside the fund did not return comment.