Insurance News Net – Steve Cohen’s SAC Capital is being sued again over allegations that the big hedge fund and other traders allegedly engaged in a scheme to manipulate and drive down the stock of Fairfax Financial(FFH:NYSE).

The lawsuit by the Toronto-based insurer is similar to stock-manipulation lawsuit filed earlier this against SAC Capital by Biovail(BVF:NYSE), a Canadian drug company.

Fairfax Financial has long been a target of short-sellers, traders who profit when a stock declines. Critics contend the insurer has long boosted its earnings through the use of financial reinsurance contracts — the kind of questionable insurance policies that landed American International Group (AIG:NYSE), in trouble with securities regulators.

Financial reinsurance, sometimes called “finite insurance,” is a type of insurance policy that can be used by an insurer to either burnish its own corporate books or help another company accomplish the same.

A copy of the Fairfax lawsuit was not immediately available. But a press release announcing the filing of the lawsuit in New Jersey state court says Fairfax is seeking “$5 billion in damages from a number of defendants who, the complaint alleges, participated in a stock market manipulation scheme involving Fairfax shares.”

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