Judge Tosses ‘Insulting’ Lawsuit Against Hedge Funds

Feb 23 2009 | 12:35am ET

A federal judge has angrily dismissed a lawsuit against a group of hedge funds accused of conspiring to drive down the price of a Canadian pharmaceutical company.

U.S. District Judge Stanley Chesler tossed the lawsuit, filed by shareholders of Biovail Corp., and sanctioned the plaintiffs’ attorneys. He blasted them for using documents that another federal judge in another Biovail case had ordered sealed and barred from use in other cases.

“This argument insults this court and, moreover, mocks the judicial system,” Chesler wrote. The conduct of the shareholders’ lawyers, William Federman and Evan Smith, “is so egregious, and the futility of imposing alternate sanctions so clear, that dismissal is the only appropriate sanction.” He said the shareholders’ suite and Biovail’s own suit against the hedge funds, including SAC Capital Advisors, were “all part of a choreographed strategy by Biovail and its attorneys” following a shareholder lawsuit against Biovail.

Chesler’s harshness stems from Federman and Smith’s use of confidential Banc of America Securities documents Biovail tried to use in its case against the hedge funds. U.S. District Judge Richard Owen in New York ordered those documents sealed.

The Biovail shareholders accused SAC of helping “ghostwrite” negative analyst reports about Biovail while the hedge fund shorted its stock. Biovail itself had accused the hedge funds and BofA of conspiring to drive down the company’s stock price.


In Depth

Q&A: Open Season For Closed-End Funds

Aug 29 2014 | 10:00am ET

When Maury Fertig and Bob Huffman, former Salomon Brothers coworkers, launched...

Lifestyle

Och Funds Women In Finance Initiative At U-M

Aug 28 2014 | 3:01pm ET

Och-Ziff Capital founder Daniel Och and his wife have made a "generous donation"...

Guest Contributor

Looking Ahead: What’s In Store For Managed Futures?

Aug 22 2014 | 12:52pm ET

The last five years were phenomenal for investors in equity indices. Will the next...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

July/August 2014 Cover

The time was right

Commodities/Futures magazine launched at the precipice of a revolution in the futures industry—really a revolution in the idea of risk management—that would move it from a small niche industry to ...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.