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]

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21 Responses to “Andrew Ross Sorkin Smells Something Fishy”

  1. Jeff Mackerel says:

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

  2. Derp says:

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

  3. Boris says:

    In Russia, this is perfectly acceptable

  4. Captain Oblivious says:

    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

    • Guest says:

      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.

      • Finance Tool says:

        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.

        • Guy who reads Levine says:

          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.

          • HS Bully Quant says:

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

          • Cash Minus Index says:

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

          • Another Levine Fan says:

            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.

        • Guest says:

          "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."

  5. Narcissus Bellicose says:

    Something tells me that Mr. Ackman has nothing whatsoever to worry about:

  6. Corleone-Levine, CFA says:

    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. William AckAck says:

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

  8. BORF says:

    Here comes the BORF!

  9. Andre Young says:

    HLF must have ratted him out to Sorkin.

  10. guest says:

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

  11. Phil Goldstein says:

    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.