Questions: Why was the case brought in Morristown in the first place? Let's get a hold of Fairfax's attorney and hear his assessment of the Spyros indictment impact. What is Spyro's status- out on bail? Has he entered a plea? We should have that. What does his lawyer say?
A Canadian insurer sees the recent indictment of an alleged accomplice in a slander effort by a group of hedge fund managers it is suing as positive development in their legal efforts.
Last summer Toronto-based Fairfax Holdings Limited filed suit in Superior Court, Morris County, New Jersey, alleging a group of financiers participated in a stock market manipulation schemed aimed at devaluing Fairfax shares.
The defendants include some of the biggest names in the hedge fund community including Steven Cohen of S.A.C. Capital Management and Exis Capital Management Inc.
In an unrelated case, a federal grand jury in New York City last week indicted one of the defendants in the Fairfax case, Spyro Contogouris, on charges of wire fraud.
Fairfax spokesman Lew Phelps said that while the Contogouris indictment is not directly related to the Fairfax, it bodes well for the ultimate success of its lawsuit.
He noted that Fairfax shares have risen from $200 to $230 in the week since the indictment was revealed on much stronger trading volume than normal.
The Fairfax lawsuit alleges that Mr. Contogouris is an operative for short-selling hedge funds that pay him to drive down the price of stocks in which they have large short positions.
He allegedly does this, according to the complaint, through stock research reports without required identification of a relationship to the funds he works with, and orchestrating stories in the media.
A.M. Best analyst Joyce Sharaf has been following Fairfax for years and agrees the indictment could lead people to rethink whatever negative perceptions they may have had about the company because of the lawsuit.
But she said there was no direct relationship to the ratings.
“We have endeavored to look through the controversy to fairly rate the company,” she said.
Mr. Phelps said the lawsuit is currently mired in a jurisdictional dispute.
The defendants successfully moved the case from state to federal court and Fairfax has filed a motion in federal court to remand it to its original court. “We don't know when the federal court will rule on this motion,” he said
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