Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Thursday, June 12, 2008

Court Says Hedge Funds Broke Securities Law But Can Vote CSX Shares

In a much-followed case, a federal district court in New York ruled that two hedge funds, Children's Investment Fund of Britain and 3G Capital Partners, that seek to elect a slate of directors at CSX Corp. had violated federal securities laws by not disclosing their positions in equity swaps.  The funds own 8.7% of CSX stock and have positions in equity swaps that amount to another 12.3% of the stock.  Citing Second Circuit precedent, the judge said that he could not bar the funds from voting their shares at the June 26 annual meeting and that any remedy was with the SEC.  NYTimes, Hedge Funds Can Vote at CSX Meeting

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