Elliott Management Corp., the hedge-fund firm founded by Paul Singer, denied allegations by the French markets regulator that it engaged in insider trading and market manipulation in shares of a toll-road company.
At a hearing today in Paris, Autorite des Marches Financiers representatives recommended a 40 million-euro ($55 million) fine, according to a person with direct knowledge of the matter who asked not to be identified because he wasn’t authorized to speak publicly.
Elliott’s U.K. unit invested in Autoroutes Paris-Rhin-Rhone SA while negotiating to sell its stake in the road company to a third party, according to the AMF. Elliott said its internal policies prevent its traders from hearing market-moving information known in other parts of the firm.
“Elliott’s trading in APRR did not at any time make use of any material non-public information, was for a legitimate business purpose that was part of a long-standing trading strategy, and did not artificially inflate the price of APRR shares,” New York-based Elliott said in a statement e-mailed to Bloomberg News today.
A spokeswoman for the AMF didn’t immediately return calls seeking comment on the hearing.
The French regulator’s allegations pertain to trades made in 2010, when Elliott disclosed that Eiffarie, a joint venture owned by construction company Eiffage SA and Macquarie Group Ltd.’s infrastructure unit, planned to buy Elliott’s APRR shares. While the regulator focused on an 11-day period in May and June of that year, Elliott had been investing in the stock continuously since 2005, according to a 2013 filing by the hedge fund.
Elliott can appeal the decision. If it loses, would pay any sanctions out of the firm’s own pocket, rather than using money from its hedge-fund investors, according to the company’s statement. Elliott first told its clients of the AMF investigation in January 2013.
A decision is expected within four to six weeks, according to the person familiar with the matter.