NJ Court Dismisses 'Short Conspiracy' Lawsuit
A New Jersey Superior Court judge has dismissed a multi-billion-dollar lawsuit against Daniel Loeb of Third Point LLC and James Chanos of Kynikos Associates LP that had been filed by a Canadian insurer that accused them of targeting the company in a short-selling conspiracy.
New Jersey Superior Court Judge Stephan C. Hansbury in Morristown said the state had no jurisdiction over the suit filed by Fairfax Financial Holdings Ltd. and dismissed it with prejudice, meaning it cannot be refiled.
Loeb and Chanos are hedge fund managers. The suit is still pending against hedge fund manager Morgan Keegan, manager of Exis Capital Management Inc., and several others. The suit was dismissed in September against SAC Capital Advisors LP, run by billionaire Steven A. Cohen in Stamford, Conn.
Also dismissed Dec. 23 from the suit were Institutional Credit Partners LLC; Jeffrey Perry, an analyst at Third Point; and William Gahan, an analyst at ICP. Third Point, Kynikos and ICP are based in New York.
Hansbury did not comment on the merits of the case in the latest dismissal. Earlier, the judge said there was no evidence SAC was part of a short-selling conspiracy.
Fairfax had charged the hedge fund managers with conspiring to spread negative information about Fairfax in order to make the price of the stock drop.
Fairfax attorney Michael Bowe has said the firm plans to appeal, but he did not return calls for further comment.
William Carmody, attorney for Loeb, says because of the wording in the judge's decision the suit is probably dead. The suit was filed originally in 2006.
The plaintiffs filed in New Jersey rather than New York, where most of the hedge funds involved are located, because of New Jersey's stronger laws, which would have allowed for triple damages, Carmody said. The suit demanded up to $11 billion in damages.
Third Point took the lead among the defendants, Carmody said.