Elliot Management in Insider Trading Trouble with the French Regulator

The AMF, French Market Regulator, is considering levying a fine of $55 million against the UK branch of hedge fund Elliott Management for insider trading, according to an article in MSN Money. The charge involves alleged market manipulation by Elliott with French motorway operator APRR. Elliott released a statement rejecting the allegations. Elliott had met with the AMF earlier where the company defended itself against the charges.

According to AMF, Elliott Management Corp. would get hit with a 27.5 million euro fine while Elliott Advisors UK would get slapped with a fine of 12.5 million euros. A decision by the AMF bureaucrats on whether to impose the fine could be made in the next few weeks. They alleges that Elliott’s UK arm engaged in the use of privileged information while negotiating a deal to sell its shares in the motorway company to APRR’s majority shareholder, Eiffarie. Eiffarie is a joint venture of Macquarie Infrastructure Group and the French construction company Eiffage. The activist hedge fund sold its 13 percent share for €850 million in June of 2010. The regulator also claims that Elliott bought the ARPP shares below the selling price right before trying to hammer out the deal with Eiffarie.

Elliott, founded by U.S. Billionaire Paul Singer, has a bulldog reputation of suing governments. In 2012, Elliott seized an Argentinian naval ship, via an injunction, in an effort to collect on an old defaulted debt from Buenos Aires. AMF has alleged that Elliott had vacuumed up 430,000 APRR shares when it had insider knowledge about the imminent deal. In its defense, Elliott insisted that it had not breached the Chinese wall, claiming that the company had been longtime buyers of APRR stock since 2005. The AMF claims it has evidence of the China wall breach and market manipulation leading up to the stock sale.

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