U.S. Attorney Bharara Takes Argentina's Side In Elliott Fight

Jan 2 2013 | 12:11pm ET

Preet Bharara is taking on another prominent hedge fund manager.

The U.S. Attorney in Manhattan, whose office has nailed some 70 people, including a number of hedge fund managers and analysts, and which is widely thought to be after SAC Capital Advisors chief Steven Cohen, is adding his voice to the fray over Argentine debt. And he's joining the chorus urging an appeals court to rule against Elliott Associates.

In an amicus curiae brief, Bharara wrote that the lower-court judge erred when he ordered Argentina to pay holdouts from its 2001 default before it paid those bondholders who accepted Argentina's debt exchanges, and a serious haircut, in 2005 and 2010. Bharara said the ruling, which has already been upheld by the U.S. Second Circuit Court of Appeals to which he wrote, featured a "novel interpretation" that is "incorrect and adverse to the U.S.' policy interests."

Some 92% of defaulted debtholders accepted the exchange. Elliott affiliate NML Capital and fellow hedge fund Aurelius Capital Management did not, and have won a number of recent court rulings against Argentina.

For its part, Argentina has both promised to abide by the U.S. rulings and to take its fight all the way to the Supreme Court, and vowed never to pay the holdouts.

Bharara isn't alone in joining the fight against Elliott: BlackRock CEO Larry Fink also chimed in, following Alliance Bernstein, Brevan Howard Asset Management and a number of hedge funds which own the restructured debt.


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