The Hedge Fund Law Report

The definitive source of actionable intelligence on hedge fund law and regulation

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By Topic: Trade Libel

  • From Vol. 3 No.16 (Apr. 23, 2010)

    Hedge Fund Management Conglomerate S.A.C. Capital Advisors Strikes Back, Countersues Biovail Corp. for Filing Vexatious Lawsuit

    On February 22, 2006, Biovail Corporation, a publicly-traded Canadian pharmaceutical company, sued S.A.C. Capital Advisors LP (SAC), the $12 billion hedge fund manager led by Steven A. Cohen, in New Jersey Superior Court.  Biovail accused SAC and numerous others of engaging in a market manipulation scheme to devalue its shares by allegedly fabricating reports about Biovail misconduct and purportedly engaging in a short selling conspiracy of its stock.  Then, on March 24, 2006, Biovail allegedly directed the filing of a proposed class action lawsuit by Biovail shareholders against SAC in the U.S. District Court for the District of New Jersey, one which “parroted [Biovail’s] complaint almost verbatim, adding a federal securities fraud claim.”  As previously reported in the Hedge Fund Law Report, in 2009, the respective courts dismissed these causes of action on the pleadings.  See “New Jersey Court Dismisses Biovail Suit Against Hedge Fund Manager S.A.C. Capital Advisors,” Vol. 2, No. 35 (Sep. 2, 2009).  On February 17, 2010, SAC struck back against Biovail by filing a lawsuit in the U.S. District Court for the District of Connecticut.  Describing Biovail’s conduct as “false, scandalous and outrageous,” SAC asserted causes of action for vexatious suit and abuse of process.  SAC alleged that Biovail manufactured its lawsuit against it to direct attention away from the well-founded class action litigation pending against it by its own shareholders and from developing criminal and regulatory inquiries by the U.S. and Canadian governments, actions which eventually resulted in a class action settlement as well as serious criminal and regulatory sanctions and fines.  We detail the background of the allegations.

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  • From Vol. 2 No.35 (Sep. 2, 2009)

    New Jersey Court Dismisses Biovail Suit Against Hedge Fund Manager S.A.C. Capital Advisors

    The New Jersey Superior Court has thrown out claims that hedge fund manager S.A.C. Capital Advisors (SAC) conspired with other firms, including the independent research firm Gradient Analytics, Inc. (formerly known as Camelback Research Alliance, Inc.) (Gradient) to drive down the stock price of Canada’s largest publicly-traded pharmaceutical company, Biovail Corporation (Biovail).  The court dismissed the suit after it determined that Biovail failed to prove it was entitled to damages and that, in any event, the court lacked jurisdiction over all but one of the defendants.  Most notably, the court stated that it did not evaluate the merits of Biovail’s claims against SAC or Gradient.  We describe the court’s reasoning as to why the research company’s reports did not give rise to a viable claim and why the court lacked jurisdiction over the parties.

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