Hedge Fund Forgot To Mention That It Was On Both Sides Of The Halliburton/Baker Hughes Deal

ValueAct Capital totally meant to mention that.

A lot of people have offered a lot of opinions on the merger between Halliburton and Baker Hughes, but one person that was always totally for the deal was hedge fund manager Jeffrey Ubben of ValueAct Capital.

Ubben Halliburton

Well, funny story about that...

Activist hedge fund investor Jeffrey Ubben failed to disclose in a timely manner his stakes in oil-services giants Halliburton and Baker Hughes while trying to influence a merger between the two companies, the Department of Justice charged in a lawsuit on Monday.
Ubben’s ValueAct Capital should have reported its ownership stake in Baker Hughes when it passed a certain threshold on Dec. 1, 2014 — and in Halliburton four days later — but didn’t file the required paperwork until later, the lawsuit alleges.


But why was that paperwork even required again?

The lawsuit centers on a 40-year old U.S. law that exempts investors who buy up to 10 percent of a company's voting securities from disclosing purchases made only for passive investment purposes.

What, an activist investor can't take passive positions in two companies and then just hope that they merge?

"Plainly the regulators are trying to send a message that their view of what constitutes passivity is far more restrictive than what some portfolio managers apparently believe," said Christopher Davis, a partner at law firm Kleinberg Kaplan who chairs its mergers practice.
The lawsuit said ValueAct used its access to senior Halliburton and Baker Hughes executives to formulate the merger and other strategies. The government is seeking a civil penalty of at least $19 million - a penalty it deemed "significant."

Well, at least Ubben and ValueAct have some other irons in the fire...

Ubben is presently receiving harsh criticism for his role, too, on the board of Valeant Pharmaceuticals.


Hedge fund didn’t disclose Halliburton stakes ahead of merger: DOJ [NY Post]

U.S. regulator sues ValueAct over Halliburton-Baker Hughes disclosures [Reuters]