(Adds comment from Exis lawyer)
By Jonathan Stempel
April 27 The billionaire Steven A. Cohen must
again face a lawsuit accusing him and his former firm SAC
Capital Advisors LP of conspiring with other hedge funds to
spread false rumors about Fairfax Financial Holdings Ltd
to drive down its stock price.
A three-judge panel of a New Jersey state appeals court on
Thursday revived conspiracy, disparagement and other claims that
had been dismissed in 2011 and 2012 against several defendants
in the $8 billion lawsuit filed by Fairfax.
It upheld the dismissal of claims against two prominent
hedge fund firms, Jim Chanos' Kynikos Associates PC and Daniel
Loeb's Third Point LLC, as well as racketeering claims against
all defendants, including Cohen and SAC.
Fairfax, a Toronto-based insurer, claimed it was a victim of
a four-year "bear raid" in which hedge funds campaigned to
manufacture bogus accounting claims and biased analyst research,
and persuaded reporters to write negative stories.
Fairfax said this was designed to generate profits from
short sales and ultimately "crush" or "kill" the company.
In a 156-page decision likening the 11-year-old case and its
millions of pages of documents to a "fearsome" lion, Judge
Clarkson Fisher said the trial judge was too quick to find no
evidence of wrongful intent by SAC, whose trading "gave it
financial goals aligned with the alleged conspiracy."
Fisher also said SAC's alleged trading strategy was "further
illuminated" by the firm's 2013 guilty plea to criminal insider
trading and payment of $1.8 billion in related settlements.
Fairfax was also allowed to pursue some claims against hedge
fund Exis Capital Management Inc and Morgan Keegan, a brokerage
that issued research about the company and its New Jersey-based
Crum & Forster commercial insurance unit.
But the court said the racketeering claims must be dismissed
because they would not be permitted in New York, where most of
the alleged misconduct occurred.
The court said it lacked personal jurisdiction over Kynikos,
Chanos, Third Point and Loeb, all of New York.
After SAC pleaded guilty, Cohen converted that firm into a
family office, Point72 Asset Management LP, which is based in
Fairfax and its lawyers said they were reviewing the
decision. A spokesman for Cohen declined to comment.
Exis' lawyer Mark Werbner said in an email that the decision
"guts" Fairfax's claims, "and we are very pleased with that."
Raymond James Financial Inc, which owns Morgan
Keegan, declined to comment.
Stewart Aaron, a lawyer for Kynikos and Chanos, said they
were "gratified by the court's well-reasoned decision." Third
Point had no immediate comment.
The case is Fairfax Financial Holdings Ltd et al v. SAC
Capital Management LLC et al, Superior Court of New Jersey,
Appellate Division, No. A-0963-12T1.
(Reporting by Jonathan Stempel in New York; Editing by Andrew
Hay and Leslie Adler)