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Member, Beacon International Group, Ltd.
TORONTO--Toronto-based insurer Fairfax Financial Holdings Ltd. last week filed a $6 billion lawsuit against a group of prominent hedge funds, alleging the defendants conspired to manipulate Fairfax's share prices.
Filed in Superior Court in Morris County, N.J., Fairfax's complaint charges that the hedge funds engaged in "a massive, illegal and continuing stock market manipulation scheme, which has targeted and severely harmed Fairfax, among other companies, and which has resulted in immense ill-gotten profits for" the more than 20 funds, the complaint states. The funds intended to profit from the destruction of Fairfax by "short-selling" the company stock, or taking positions in the market that would be profitable in the event Fairfax's stock price declined, says the complaint.
Fairfax in its suit alleges that S.A.C. Capital and its affiliates are at the center of the scheme--which the conspirators called the "Fairfax Project"--which was intended to "damage severely, if not destroy, Fairfax and its affiliated companies," by:
c Disseminating false and misleading information about Fairfax to company employees and shareholders, bankers, regulators and rating agencies.
c Spreading inaccurate information to the public through bogus analyst reports and statements to the financial press.
c Engaging in a long-term campaign of personal harassment of current and former employees, executives and shareholders of Fairfax.
c Attempting to instigate regulatory probes of Fairfax by providing false and misleading data to regulatory agencies.
The suit seeks to recover no less than $6 billion in compensatory damages as well as punitive damages and treble damages for the defendants' alleged misconduct.
"This is another baseless lawsuit by a company attempting to shift the blame for its fundamental business problems," a spokesman for S.A.C. said. "We are confident that we will prevail."