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The AMF Enforcement Committee fines Elliott Advisors and Elliott Management a total of €16 million

Published on May 7, 2014

By its decision of 25 April 2014, the AMF Enforcement Committee imposed financial penalties on Elliott Advisors (UK) Limited, a company incorporated under English law, for transmission of inside information, and Elliott Management Corporation, a company incorporated under American law, for use of this inside information.

By its decision of 25 April 2014, the AMF Enforcement Committee imposed a fine of €8 million on Elliott Advisors (UK) Limited, a company incorporated under English law, and a financial penalty of €8 million on Elliott Management Corporation, a company incorporated under American law. Elliott Advisors was found to have sent Elliott Management inside information about the existence of negotiations prior to the sale by the Elliott investment fund (hereafter, the “Elliott fund”) of its stake in the capital of APRR to Eiffarie. Elliott Management was also held to have used this inside information between 28 May and 11 June 2010. The Committee did not find that Elliott Advisors had committed a breach of rules on the use of inside information, and considered that the breach of regulations regarding the manipulation of the APRR share price notified to the two companies was not established.

In 2006, the French State and the Autoroutes de France public establishment sold their entire stake in APRR, i.e. 70.2% of the capital and voting rights, to Eiffarie, a company jointly owned by French and Australian groups Eiffage and Macquarie. Eiffarie then filed a standing market offer with a view to directly or indirectly holding more than 95% of APRR voting rights and submitting a proposed buyout offer. However, when the standing market offer came to an end, Eiffarie only held 81.48% of APRR’s capital and voting rights. Against this backdrop, Mr A., who is joint director of Elliott Management with Mr B, and Messrs C and D, members of the Elliott Advisors trading and hedge management team, decided to initiate an APRR equity investment strategy consisting of acquiring a sufficient number of shares at a reasonable price in order to build up a large block of equity, the sale of which the Elliott fund could then negotiate with Eiffarie on advantageous terms. This strategy was implemented by Elliott Advisors after consulting with Elliott Management.

After the breakdown in 2008 and 2009 of initial negotiations to sell APRR shares held by the Elliott fund to Eiffarie, contacts were renewed in 2010 between the Elliott Advisors trading team and Macquarie. On 26 April 2010 Elliott Advisors, now joined by the company Sandell which also held APRR shares, made an offer to sell Eiffarie all the shares held by the two companies.

Eiffarie’s agreement on 20 May 2010 to enter into negotiations for a sale, followed on 26 May by Elliott and Sandell’s proposal for a meeting, accepted the next day by Eiffarie with the date and venue of the meeting, led the Enforcement Committee to conclude that as early as 27 May 2010, the information about the existence of negotiations for the sale by the Elliott fund of its stake in APRR to Eiffarie was inside information.

After ascertaining that Elliot Advisors held inside information as early as 27 May 2010, the Enforcement Committee then established that Elliott Advisors transmitted this information to Elliott Management, based on a body of evidence comprising (i) Mr A’s knowledge of the Elliott fund strategy with regard to APRR capital, (ii) evidence relating to the set-up within the Elliott fund of a Chinese Wall and its updating process, (iii) evidence relating to hedge management of the APRR equity investment, and (iiii) evidence relating to the compilation of a list of insiders.

The Enforcement Committee also held that Elliott Management had failed in its obligation to refrain from trading in APRR shares when, between 28 May and 11 June 2010, it acquired 429,646 APRR shares on behalf of the fund that it managed, although it held the inside information received from Elliott Advisors. However, this breach was not held against Elliott Advisors, given that although this company placed the orders, it only did so at the request of and on behalf of Elliott Management.

 Lastly, after noting that Elliott Advisors’ transactions in APRR shares on the orders of Elliott Management between 28 May and 11 June 2010 did not lead to either an intensification in purchases by the Elliott fund in this equity or in a concentration of such purchases in the closing auction, and that they had no impact on the variation in the APRR share price, the Committee decided that the breach of price manipulation rules was not established.

In setting the amount of the penalties, the Enforcement Committee concluded that Elliott Management was not the economic beneficiary of the transactions. It decided that the amount of the gain, coming to €2,759,992, could not be used to determine the amount of the penalty by applying a multiple, but nonetheless served as an element to appraise the seriousness of the breach committed by both Elliott Management and Elliott Advisors. It also took into account the savings made by reducing the hedge from 7 June 2010 onwards, and the advantages derived from the satisfaction of clients for whom the breach was committed.

Press contact:
AMF Communication Directorate - Florence Gaubert - Tel.: +33 (0)1 5345 6034 or +33 (0)1 5345 6028


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Head of publications: The Executive Director of AMF Communication Directorate.
Contact: Communication Directorate – Autorité des marches financiers 17 place de la Bourse – 75082 Paris cedex 02