| April 27
April 27 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
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