French regulator accuses Elliott Management of insider dealing
France’s market regulator has accused the UK arm of Elliott Management, the US hedge fund founded by billionaire Paul Singer, of insider trading and market manipulation in its handling of an investment in a French motorway operator in 2010.
In a case strongly contested by the activist investor, the AMF said the UK arm of the US group was guilty of using privileged information to deal in shares in APRR, the motorway operator, while it was simultaneously negotiating to sell its stake in the company to APRR’s majority shareholder
Elliott and a minority investment partner sold their joint 13 per cent stake to Eiffarie, a joint venture between Eiffage, the French construction company, and Macquarie Infrastructure Group, in June 2010 for €850m.
Elliott’s stake enabled Eiffarie to take its shareholding in the previously privatised APRR to what the AMF called the “magic number” of 95 per cent, triggering the buyout of remaining shareholders.
At a hearing in Paris on Friday attended by Mr Elliott’s son Gordon, who at the time led the hedge fund’s UK arm, the AMF said Elliott had repeatedly bought shares at below its selling price in the run-up to the deal with Eiffarie.
It said Elliott, best known for its refusal to accept the terms Argentina’s proposed debt restructuring, had bought almost 430,000 APRR shares in the period when it has insider knowledge, allowing it to make a profit of €2.7m.
The hedge fund’s knowledge about the approaching deal “indisputably gave Elliott Management an advantage over others in the market”, the AMF said, alleging that the “Chinese wall” created on APRR dealings within Elliott had been abused.
But Elliott’s defence denied any wrongdoing, arguing the firm had not been in possession of privileged information on the dates it was accused of insider dealing by the AMF and insisted its Chinese wall had not been breached.
It maintained Elliott had been a long-term investor in APRR dating back to 2005.
Elliott also dismissed concurrent allegations of market manipulation to inflate APRR’s share price in the period before the sale to Eiffarie.
A verdict in the case is not expected for several weeks.