Hedge Fund Reader : Insider Trading Alleged

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August 11, 2006

Insider Trading Alleged

Okumus capital, a hedge fund worth $800 million, has asked a New York state court to order Goldman Sachs and Jeffries to reveal names of their customers who, between them, bought 2.4 million shares of Mercury Interactive. The fund claims that the buyers were tipped off about an impending take-over bid for Mercury Interactive by Hewlett-Packard (HP), and as a result, the stocks were sold at a much lower price than they would have been worth if the purchase announcement had been made public. Mercury Interactive provides software testing services.

Okumus does not accuse Goldman Sachs or Jeffries of any wrongdoing, according to the case filed in the court. But the claim remains that the hedge fund lost $27 million by unwittingly selling the shares before the acquisition news was common knowledge.

While Goldman Sachs is named in the case as the main adviser to Mercury Interactive, HP’s adviser Merrill Lynch is not mentioned at all. Jeffries is not listed as adviser to either company in the transaction.

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August 11, 2006 in Gossip & Scandal | Permalink