Bond Insurer May Sue Over Ackman Insolvency Comments

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.

 


In Depth

GSAM's Papagiannis: Liquid Alternatives For The Long Run

Apr 21 2017 | 8:44pm ET

Interest in liquid alternatives cooled a bit last year amid a broad shift in investor...

Lifestyle

Aston Martin Returns To Debt Market As DB11 Drives Turnaround

Mar 31 2017 | 5:21pm ET

James Bond’s preferred carmaker is returning to the public debt markets for the...

Guest Contributor

Debunking Conventional Investment Wisdom (Part II)

Apr 17 2017 | 5:56pm ET

The alternative investment industry is currently replete with buzzwords around data...

 

From the current issue of