By Tara Perkins
At least one Canadian company is cheering on U.S. authorities as they crack down on alleged insider trading rings.
Executives at Fairfax Financial Holdings Ltd. (FFH) , which is suing a group of hedge funds and their employees alleging that they conspired to drive down its stock price, are taking heart from the new muscle that prosecutors are showing.
“The use of wire taps for the first time in an insider trading case demonstrates the significant emphasis that U.S. authorities are now placing on this issue,” said Fairfax spokesman Paul Rivett. “We applaud these efforts and this focus on what we have for some time believed was a serious problem.”
On Friday U.S. authorities arrested billionaire hedge fund manager and the founder of New York-based Galleon Group Raj Rajaratnam, alleging that he headed up an insider trading ring. Lawyers say it’s the largest hedge fund case ever prosecuted.
Mr. Rivett notes that “in 2006 Fairfax filed a lawsuit containing detailed allegations of a broad range of misconduct by hedge funds and those working with them, including allegations that analysts had leaked the content of their research reports before publication to a network of collaborators.”
The suit is still winding its way through a New Jersey court. Meanwhile, “one of the analysts sued was fired for engaging in precisely the conduct we alleged,” says Mr. Rivett. He also notes that U.S. authorities have reportedly opened an investigation into Fairfax’s allegations.
None of the allegations in Fairfax’s case have been proved in court.