Morgan Keegan & Co. will pay $20 million to settle a lawsuit that Fairfax Financial Holdings filed more than a decade ago against the firm and a group hedge funds for allegedly driving down its stock under a short-selling scheme.
The payment will resolve claims the Canadian insurer made against Morgan Keegan in a 2006 suit seeking damages for alleged stock market manipulation involving its shares, according to a Fairfax statement on September 4. The company said it is pursuing remaining claims against other defendants in the suit.
Fairfax had sued Steve Cohen and his former hedge fund firm SAC Capital Management, alleging ties between Cohen and a scheme to disseminate false reports about the Canadian insurance provider and its New Jersey subsidiary Crum & Forster Holdings Corp. Fairfax claimed that a Morgan Keegan analyst wrongly issued negative reports on the company, which benefitted SAC and other hedge funds that were short its stock, according to an amended complaint filed in 2008.
“We are pleased to have secured partial compensation for the disparaging claims made about Fairfax and a commitment that the reports making those claims are no longer in circulation,” Michael Bowe, an attorney at Kasowitz Benson Torres who is representing Fairfax, said in an email. “We are continuing to pursue our claims against the remaining defendants in trial and on appeal.”
A spokesman for Raymond James Financial, which acquired Morgan Keegan in 2012, declined to comment on the settlement. John Varnell, a spokesperson for Fairfax, didn’t return a phone call seeking comment.
Toronto-based Fairfax is also continuing its case against Exis Capital, which was among the hedge funds named in the lawsuit, according to Bowe. Exis didn’t immediately provide comment.
[II Deep Dive: New Jersey Judge Dismisses Fairfax Lawsuit Against Steve Cohen]
Earlier this year, a judge dismissed Fairfax’s claims against Cohen and SAC on jurisdictional grounds, according to a document filed March 29 with the Superior Court of New Jersey in Morris County.
Judge Frank DeAngelis said in the document that he could not rule on the suit as there was “no evidence that the SAC defendants expected or intended to cause injury in New Jersey when they were conspiring to drive down the share price of a Canadian company.”