• 05 Aug 2014 at 12:00 PM

Andrew Ross Sorkin Smells Something Fishy

Late last week, Botox-maker Allergan Inc sued Valeant Pharmaceuticals and Pershing Square, alleging the latter two had engaged in insider trading when Pershing bought $1 billion worth of Allergan shares ahead of a takeover offer by the hedge fund and Valeant. On the suggestion of wrongdoing, Valeant called with charges “baseless,” while Ackman stated in a press release that “This is a shameless attempt by Allergan to delay the shareholders’ fundamental right to call a special meeting and vote their shares. Allergan is threatened by our progress toward calling the special meeting. This scorched-earth approach is further evidence of the board’s and management’s further entrenchment.”

Not entirely convinced? Dealbook‘s Andrew Ross Sorkin, who in his column today says WAIT JUST A SECOND, PEOPLE.

There was no secret phone call or briefcase full of money. Instead, Valeant’s chief executive, J. Michael Pearson, called Mr. Ackman directly and told him about his company’s intent, seeking a partnership of sorts in which Mr. Ackman would build a large position in Allergan stock and help Valeant press Allergan’s board to acquiesce to a deal…Still, something hasn’t smelled right about these clever machinations. An analyst at Sanford C. Bernstein quite rightly titled a report “How Can It Be Legal?” [...] Whatever the case, Valeant and Mr. Ackman’s actions, at least from a public policy perspective, may have been too clever by half. When Sanford C. Bernstein wrote a note to clients at the time the offer was first announced, it described Pershing Square as having found an opportunity for “regulatory arbitrage.” Now a judge will decide whether it was truly regulatory arbitrage or something more sinister.

Ackman and Valeant’s Bid for Botox Maker May Be Too Clever to Be Legal [Dealbook]

21 comments (hidden to protect delicate sensibilities)
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Comments (21)

  1. Posted by Jeff Mackerel | August 5, 2014 at 12:16 PM

    My whole hog stinks to high heaven all in one basket.

  2. Posted by Derp | August 5, 2014 at 12:22 PM

    If they didn't have a legal agreement of partnership, isn't this a picture perfect definition of insider trading?

  3. Posted by Boris | August 5, 2014 at 12:24 PM

    In Russia, this is perfectly acceptable

  4. Posted by Captain Oblivious | August 5, 2014 at 12:25 PM

    Company calls Hedge Fund manager to tell them that they need his help to force someone into a deal no one else knows about? I see no issue.

    Do we really need a federal judge for this?? Judge Joe Brown would have this sewed up in 27 minutes

  5. Posted by Narcissus Bellicose | August 5, 2014 at 12:41 PM

    Something tells me that Mr. Ackman has nothing whatsoever to worry about: http://www.campaignmoney.com/political/contributi

  6. Posted by Corleone-Levine, CFA | August 5, 2014 at 1:01 PM

    Hmm, maybe Matt's absence this week is because he's been drafted as Pershing Square's interim special counsel for insider trading defense related matters and associated footnotes? Y'know, like a wartime consigliere but with more charts.

  7. Posted by William AckAck | August 5, 2014 at 1:01 PM

    Join me next year for the most important presentation of my life, live from Cellblock B, Morgantown FCI, Morgantown, WV

  8. Posted by BORF | August 5, 2014 at 1:26 PM

    Here comes the BORF!

  9. Posted by Andre Young | August 5, 2014 at 2:02 PM

    HLF must have ratted him out to Sorkin.

  10. Posted by guest | August 5, 2014 at 2:27 PM

    would love to see Ackman in the same cell with the CEO of Herbalife

  11. Posted by Nailz6 | August 5, 2014 at 2:30 PM

    If anyone loves insider trading, it's Matt Levine.

  12. Posted by Guest | August 5, 2014 at 2:31 PM

    Ok Captain, but we're going to check back in with you if this deal doesn't happen, the stock settles back at or below its unaffected price, and both Pershing and Valeant have burned up tens of millions in fees and opportunity cost for nothing.

  13. Posted by Finance Tool | August 5, 2014 at 2:35 PM

    WTF are you talking about? Get back on your meds please. A deal doesn't have to happen to bring insider trading charges. The mere exchange of non public info is in and of itself illegal you dumb fuck. Get back in your cage.

  14. Posted by Guy who reads Levine | August 5, 2014 at 4:19 PM

    The mere exchange of non public info is not in and of itself illegal, you even dumber fuck. It has to be material, traded upon, and there must be a fiduciary duty to either not reveal the information or to not trade on it. JFC.

  15. Posted by HS Bully Quant | August 5, 2014 at 4:27 PM

    I'm sure Finra and the SEC would politely disagree these days shitbird

  16. Posted by Cash Minus Index | August 5, 2014 at 4:37 PM

    Someone need a natural gas basis trader in here? I keep hearing "dumb fuck" so, you know……….

  17. Posted by Guest | August 5, 2014 at 5:25 PM

    "The mere exchange of non-public info is in and of itself illegal." Wow. So last time I called a bank about potentially financing an as yet announced deal we were all breaking the law? After all, the bank was going to make money if they participated and if the deal got done. And I tipped them off – insider trading all around!
    Next time you say something so completely stupid and obviously wrong, maybe don't follow it up with "dumb fuck."

  18. Posted by Another Levine Fan | August 5, 2014 at 6:49 PM

    Well said. Matt Levine (his name be praised) has taken dumps that know more about insider trading law than Sorkin, Finance Tool, and Captain Oblivious put together.

    Between Sorkin and Gretchen Morgenson, the NYT must have a policy that its financial columnists have no finance, accounting, or securities law knowledge whatsoever.

  19. Posted by Phil Goldstein | August 5, 2014 at 11:43 PM

    I predict the case will get dismissed (or settled). Allergan has no standing because it was not harmed and because the statute it is suing to enforce does not provide for a private cause of action.

  20. Posted by Tex | August 6, 2014 at 4:50 AM

    bend over & pick up that soap, Billy

  21. Posted by Guest | August 6, 2014 at 8:29 AM

    I may be the only one, but does the fact that the above comment was posted at 5am make it a lot more creepy?