Financial Times- The Securities and Exchange Commission is investigating claims made in a high-profile dispute between Canadian insurer Fairfax Financial anda group of powerful hedge funds that the company says used underhanded tactics to drive down its share price, according to people familiar with the matter.
Fairfax alleged in a $5bn lawsuit filed last summer that the hedge funds, including SAC Capital and Exis Capital, spread negative market rumours about the company and attempted to harass and intimidate Fairfax employees, directors and their family members.
Fairfax claimed the activities were part of a co-ordinated effort, dubbed “the Fairfax projectâ€Â, to crush its shares.
The hedge funds have strongly denied the charges and have accused Fairfax of abusing the legal system to silence critics who have legitimate questions about its complex finances, including its use of controversial reinsurance contracts.
People close to the situation said the SEC was examining Fairfax’s allegations.
Fairfax is also part of an ongoing industry-wide probe by the SEC into accounting treatment of non-traditional insurance and reinsurance contracts.
No action has so far been taken against Fairfax as part of that investigation.
An SEC spokesman declined to comment on whether it was investigating claims made by Fairfax in its lawsuit against the hedge funds. Fairfax also declined to comment on anything relating to the SEC.
