This content is from: Portfolio

The Morning Brief: Insider Trading Arrests in London; Corvex Management Runs Into Trouble

The U.K.’s Financial Services Authority announced Wednesday morning that it teamed up with the Metropolitan Police Service and arrested three men in connection with an investigation in insider dealing and market abuse. It did not provide further details but said the arrests are not linked to any other ongoing insider dealing investigation. According to Bloomberg News, MAN Group later confirmed an employee of its GLG hedge fund division was one of the three individuals arrested.

Corvex Management, founded by Carl Icahn disciple Keith Meister, and Related Fund Management have sued CommonWealth REIT in the Maryland State Court, calling on the company to immediately cease its proposed equity offering and debt repurchase, and enter into discussions with the two investors about boosting the stock’s price. The two investors, who filed jointly with the Securities and Exchange Commission, said they are prepared to proceed with their previous proposal to acquire all the outstanding shares of the company for $25 per share, a 58 percent premium to the closing price of $15.85 per share on February 25. They said they may “meaningfully increase this proposed offer” after they complete due diligence. The lawsuit filed against Commonwealth, its board of trustees and external manager, REIT Management & Research, alleged among other things that CommonWealth’s trustees, aided and abetted by RMR, breached their fiduciary duties to CommonWealth’s shareholders.

Fortress Investment Group, one of a few publicly-traded alternative investment management companies, reported a 114 percent increase in pretax distributable earnings in the fourth quarter and a 15 percent gain to $278 million for the full year. Assets under management stood at $53.4 billion as of year-end.

Bad news for shareholders of VeriSign, the stock with the largest concentration of hedge fund ownership, with more than 14.7 million shares as of year-end, according to Goldman Sachs. On Wednesday, Credit Suisse Securities downgraded the shares of the internet software and services firm to Neutral. from Outperform. The investment bank said a recent ruling — that the company, a global registry operator for .com and .net domain names, will not be able to raise its price for .com renewals in the next six years — has largely capped upside revenue estimates.

After all the buzz, Apple’s annual shareholder meeting on Wednesday wound up being a dud. CEO Timothy Cook did not say what he plans to do with the company’s $137.1 billion in cash and investments, although he did say he is in “very, very active” talks regarding some sort of decision or action. Little surprise, then, that the stock dropped about 1 percent on a day when most market indices surged more than 1 percent.

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