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Saturday, 21 January 2017
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Aug 11 2008 | 10:19am ET
Alleged rumors about Lehman Brothers and Bear Stearns aren’t the only ones that have caught the attention of regulators. Last month, New York State Insurance Superintendent Eric Dinallo suggested that “rumor-mongering” about MBIA Inc. “crossed a line.” The bond insurer apparently agrees, and may sue the alleged rumor-mongerer-in-chief: hedge fund manager William Ackman.
MBIA is “assessing all our options, including litigation,” CEO Jay Brown said. “MBIA agrees that statements [by Ackman] may have violated New York State insurance law.”
Under New York law, it is illegal to spread rumors or make statements “untrue in fact” about an insurance company’s solvency. Ackman, who runs New York-based Pershing Square Capital Management, said earlier this year that he believes MBIA may be insolvent.
Pershing has made millions shorting MBIA shares, which have lost 80% of their value in the past year. Ackman has said the fund will make hundreds of millions more if it were to file for bankruptcy.