France Eyes Alleged Elliott Insider Trading

Jan 7 2013 | 12:58pm ET

Elliott Management faces an insider-trading inquiry in France stemming from its deal to sell its stake in a French highway network

The Autorité des Marchés Financiers sent Elliott's U.K. unit a "letter of grievance" at the end of last month, warning that it was the subject of a probe. AMF is looking at Elliott's purchase of Autoroutes Paris-Rhin-Rhone shares between May and June of 2010, just before it and another money manager sold their 13.7% stake in APRR. The regulator said it believed the purchases inflated APRR's stock price and earned Elliott €2.75 million in ill-gotten gains.

Elliott denied the allegations, calling them "without merit" and "not supported by the evidence." The hedge fund said that the trades in question were the last 11 of more than 300 trading days during which it bought APRR stock over a four-and-a-half year period.

"Elliott's trading in APRR did not at any time make use of any material nonpublic information, was for a legitimate business purpose, and did not artificially inflate the price of APRR shares," Elliott wrote in a U.S. regulatory filing sent to investors.

The hedge fund said that it had a "Chinese wall" in place to prevent information about the deal with construction company Eiffarie to reach its traders. Eiffarie used its purchase to increase its APRR holdings to more than 95% of its shares. No Elliott employees have been disciplined or dismissed for the trading.

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