Fairfax Financial Holdings Charges Hedge Funds With Manipulating Its Shares, Seeks $5 Billion In Damages

Toronto based Fairfax Financial Holdings has filed a $5 billion lawsuit against several large hedge funds that are reputed to have engaged in a scheme to manipulate Fairfax's shares. Fairfax's lawsuit seeks damages from a number of prominent players, including

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Toronto-based Fairfax Financial Holdings has filed a $5 billion lawsuit against several large hedge funds that are reputed to have engaged in a scheme to manipulate Fairfax’s shares.

Fairfax’s lawsuit seeks damages from a number of prominent players, including SAC Capital Management and several of its entities, SAC founder Steven Cohen, Lone Pine Capital, Rocker Partners and Third Point and its founder Daniel Loeb.

The lawsuit is reported to claim that SAC, several other funds, a research analyst and a pair of hedge fund “operatives” schemed to drive the company’s stock price down to bring in large profits.

According to Reuters, the suit also accuses the defendants of preparing “a massive and fraudulent disinformation campaign attacking Fairfax and other targeted publicly traded companies” using “biased, negative” analysts reports and then made money by shorting the stock.

Toronto’s “Globe and Mail” newspaper reports that Fairfax’s lawsuit also alleges that one of the hedge funds employees in question of delivered a package to the Anglican church in Toronto which Watsa attends that compares Watsa’s appearance to a fugitive who had defrauded the Catholic Church. An accompanying 30-page document in the package described that fugitive as engaging in “sadomasochistic and group sex and other sensational activities.”

The SAC says all of the allegations are without merit.

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