People like Paul Singer don’t always enjoy the warmest reception abroad when they pack their particular brand of investing—that of the activist variety—in their carry ons. His Elliott Management has already had its run-ins with the French authorities. And now, as if to warn him and his ilk, who increasingly have their eye on the famously efficient and not-at-all bureaucratic French corporate establishment, he’s had another.
At the heart of the case are regulatory declarations Elliott made as it was building a derivatives position in Norbert Dentressangle, a transport company. French investigators say Elliott’s filings indicated it had acquired contracts for difference when it had actually bought equity swaps…. Elliott -- which subsequently acquired about 9% of Norbert Dentressangle shares -- was also accused of failing to quickly flag its intention not to tender into XPO’s 2015 offer….
“Elliott knowingly tried to conceal its strategy,” said Audrey Micouleau, the AMF official who spoke on behalf of investigators. She accused Elliott of obstructing the probe and recommended a 15 million-euro fine for Elliott Advisors UK Ltd. and an additional penalty of 5 million euros for Elliott Capital Advisors LP in relation to the three alleged infringements.
“Trying to conceal its strategy” doesn’t sound like a hallmark of a man who once had a country’s flagship naval vessel seized to make a point and whose strategy often amounts to publicly savaging the incompetence of management for failing to see the wisdom of his publicly-announced recommendations. And it’s not just us who think so: One of Micouleau’s colleages and all of Elliott’s lawyers think it’s all baratin.
“There’s no evidence showing the market was misled,” Le Lorier said….
“The CFD/swaps issue, it didn’t matter, everyone knows that when Elliott is involved in a stock it may seek to be a holdout or it may tender,” Zabel said Friday. “So there’s no deception there. It was a mistake at most.”
Jean-Pierre Martel, a lawyer for Elliott, wondered why there was so much “hostility” toward the hedge fund…. “No differentiation is made in the market between CFDs and equity swaps,” he said. “It’s like a car and an automobile.”
Of course, the global champion in hostility towards activist hedge funds is Japan. Still, when you’re home to an unwieldy, unholy mess as large as SoftBank—about which the best that can be said is it might not be handing the guy who cost it $6.5 billion another billion dollars to go away—Singer can hardly be expected not to pounce. And others are joining him.
Elliott has built up a stake of more than $2.5 billion in SoftBank, the Tokyo-based telecommunications company and technology investor, and is advocating a share buyback of $10 billion to $20 billion, people familiar with the matter said last week. SoftBank said it agreed with Elliott that its shares were deeply undervalued and welcomed the feedback….
The government of Prime Minister Shinzo Abe sees corporate-governance improvements as a way to revitalize the economy, and traditionally quiet Japanese institutional investors such as life insurers and banks are under pressure to monitor more closely the companies in which they invest…. “I think this year will finally see a foreign activist successfully take over an asset-rich company—very likely that company will be Unizo,” said Nicholas Smith, an equity analyst with CLSA.
And who owns a 13.1% stake in said Tokyo real-estate company? Why, Elliott Management.
Elliott Hedge Fund Faces Fine in French Market Abuse Probe [Bloomberg]
Elliott Push at SoftBank Reflects Rise of Shareholder Activism in Japan [WSJ]
New SoftBank Tech Fund Falls Far Short of $108 Billion Fundraising Goal [WSJ]
WeWork chairman says it’s ‘totally false’ that ousted CEO Adam Neumann left with $1 billion [CNBC]