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Elliott Management Investigated On Charges of Insider Trading

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Elliott Management Investigated On Charges of Insider Trading

Argentina must be loving this. Elliott Management, Paul Singer’s $20 billion hedge fund, has come under scrutiny of French authorities on charges of insider trading, reports Financial Times. Apparently, the fund engineered trading in the shares of  Autoroutes Paris-Rhin-Rhône, back in 2010, to boost the share price. Elliott sold a 13.7 percent stake in the toll road company, at a price of  900 million euros, to another construction company.

Autorité des Marchés Financiers, the French equivalent of SEC, is probing into the events that lead up to the sale. The accusation is that Elliott deliberately manipulated the trading to raise the share price and bagged a profit of 2.75 million euros. Elliott vows to defend itself vigorously against the false accusations. Ironically, this statement is quite reminiscent of the fervent rejoinders from Argentine PM when Elliott refused to budge and chose to impound Argentine naval vessels. The firm also said that the transactions never made use of any non public information. The fund said that the purchase and sale of APRR shares was done according to a long term strategy and spanned over 300 days of trading. Elliott acquired the stake in Dec 2005 and sold it in June 2010 to Eiffaire, who had shown interest in increasing its stake to 95 percent.

On the subject of Argentina, the subsidiaries of Elliott Management have been holding out on Argentine debt and refuse to accept the terms of the restructured debt. The tug of war between the country and the hedge fund is still unraveling. In a significant development, a Manhattan court judge ruled that Argentina is obligated to pay the holdout creditors and should put the money it owes in an escrow account. However, the judgment was not implemented after Argentina won a stay order.

Other hedge fund managers who have been targets of similar investigations are Berkshire Hathaway’s former executive David Sokol and Mathew Martoma of SAC Capital.

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