Elliott Management Corp., the $21.5 billion hedge fund run by Paul Singer, said a French regulator is investigating possible insider trading by its U.K. unit in Autoroutes Paris-Rhin-Rhone SA in 2010.
Elliott received a “letter of grievance” on Dec. 28 from Autorite des Marches Financiers that said the hedge fund may have purchased APRR shares between May 28, 2010, and June 11, 2010, based on material, nonpublic information, the New York based firm said yesterday in a filing sent to investors, a copy of which was obtained by Bloomberg News. The French regulator said Elliott may have inflated the stock price before selling and made a profit of about 2.75 million euros ($3.6 million).
“The statements made by the AMF in its letter are without merit and are not supported by the evidence,” Elliott said in the filing. “Elliott’s trading in APRR did not at any time make use of any material nonpublic information, was for a legitimate business purpose, and did not artificially inflate the price of APRR shares.”
Eiffarie, a joint venture owned by construction company Eiffage SA and Macquarie Infrastructure Group, said in 2010 it planned to acquire shares of APRR from Elliott. In yesterday’s filing, Elliott said its purchase of APRR’s stock was part of a long-term investment strategy and that it bought the stock on over 300 trading days between December 2005 and June 2010. The French regulator raised questions with respect to the last 11 of those 300 trading days, according to the filing.
Elliott said it had a “Chinese Wall” in place with respect to APRR during the period in question and no material, non-public information was given to personnel who directed the purchase of the stock.
The letter marks the start of administrative proceedings against the fund, according to the filing. Elliott plans to defend the administrative proceedings “vigorously” and that none of the costs, including potential penalties, will be borne by Elliott funds, according to the filing.
No Elliott staff have been disciplined nor terminated with regard to the trade, according to a person with knowledge of the firm who asked not to be identified because the person wasn’t authorized to discuss it publicly. Elliott’s U.K. unit is registered with the country’s markets regulator, the Financial Services Authority, according to its website.
Peter Truell, a spokesman for Elliott, declined to comment beyond the filing. Florence Gaubert, a spokeswoman for AMF in Paris, didn’t immediately reply to an e-mail seeking comment after regular business hours.