N.J. Judge Rules Tycoon’s Lawsuit Against Morgan Keegan can proceed

Green Light,

Go Ahead,

You may proceed with the case. 

I don’t know about you, but I see the “green light” everywhere in bits and pieces. Since the weekend before Independence day, I have seen many similar pieces eluding to the reality of our financial situation. Some don’t want to know about the financial situation, others don’t care. Most want to KNOW the TRUTH and ultimately ACCOUNTABILITY. And since seeing is believing for most people, they want to see it on their main source of news and information : the TV. I’d rather get my news from other sources, so I was rather “pleasantly” surprised to find the trickle coming through on MSM. Hopefully, this is the beginning of a new trend. Moreover, let the MSM news finally reveal what’s really going on in the world with INTEGRITY and without BIAS.

N.J. judge rules tycoon’s lawsuit against Morgan Keegan can proceed

By Ted Evanoff

Over the next six years, seven hedge funds were dismissed from the lawsuit. Last Thursday, however, Judge Stephan Hansbury of state Superior Court in Morristown, N.J., ruled Fairfax’s case against S.A.C. spinoff Exis Capital Management Inc. and Morgan Keegan can go to trial.

Canadian tycoon Prem Watsa’s long fight against an American hedge fund baron has boiled down to a Memphis question — did Morgan Keegan report bad news about the tycoon a decade ago just to favor the baron?

A state court in New Jersey recently ruled that Watsa’s lawsuit against Morgan Keegan & Co. can proceed to trial on Sept. 10.

Morgan Keegan, the well-known investment firm founded in Memphis, is accused of conspiracy, trade libel and intentional interference by Toronto-based insurer Fairfax Financial Holdings Ltd., which has asked for compensatory damages totaling $8 billion.

The Memphis firm, acquired on April 2 by a Florida rival, is already busy on unrelated court cases, fending off investors riled at its failed mutual funds and losses in auction-rate securities. None of those cases, though, contain the marquee names or the potboiler language of the Fairfax lawsuit.

Winding through the courts for the last six years, Watsa’s cases argue the stock value of his Fairfax Financial plunged in 2003 after a so-called bear raid conducted by conspiring Wall Street firms with the help of Morgan Keegan.

A Morgan Keegan setback could cost Regions Financial Corp. The Birmingham-based bank, which acquired Morgan Keegan in 2001, sold the 3,000-employee investment firm for $1.2 billion to Raymond James Financial Inc. of St. Petersburg, Fla. With the sale, Regions agreed to shoulder ongoing legal costs at Morgan Keegan.

Watsa, once called the “Warren Buffett of the North” by the magazine Canadian Business, has tried to pry billions of dollars in alleged damages out of Steven A. Cohen, a Connecticut hedge fund founder and New York Mets part-owner. Worth about $8.2 billion, Cohen ranks 34th on the list of richest Americans, according to Forbes’ magazine’s annual tally.

“Cohen personally has one of, if not the, most powerful market-moving capabilities on Wall Street,” claims the 2006 lawsuit, which argues Cohen’s riches enabled him to steer seven other hedge funds to conspire with his S.A.C. Capital Management LLC in a campaign to knock down the stock price of Fairfax Financial, the Toronto firm founded by Watsa.

Cohen profited because he had placed side bets, called short sales, that made money for S.A.C. if the Fairfax stock price fell, the lawsuit claims. Morgan Keegan was an alleged culprit due to a 2003 report by an employee, research analyst John Gwynn. His report warned investors of financial problems at Fairfax. The stock price of Fairfax dropped 20 percent shortly after the report was issued, the lawsuit claims.

Fairfax problems traced to insurance companies Watsa had recently acquired and folded into Fairfax. Although other analysts later contended the Gwynn report was accurate, Fairfax filed a lawsuit against the Memphis firm, S.A.C. and seven other hedge funds.

“While it is not our practice to comment on any prospective litigation, we believe these claims are outrageous and defamatory,” a Morgan Keegan spokeswoman said in 2006. “We stand squarely behind the professionalism and objectivity of our investment research and intend to fight the lawsuit vigorously.”

Over the next six years, seven hedge funds were dismissed from the lawsuit. Last Thursday, however, Judge Stephan Hansbury of state Superior Court in Morristown, N.J., ruled Fairfax’s case against S.A.C. spinoff Exis Capital Management Inc. and Morgan Keegan can go to trial.

“There is no question that there was a campaign of negative information being circulated about Fairfax,” Hansbury declared, according to Bloomberg News. “There is absolutely no question in this litigation, and defendants do not contest, that plaintiffs suffered massive pecuniary/economic loss in this case.”

A spokesman for Raymond James did not return a call seeking comment.

In March, Cohen was questioned in a deposition hearing conducted by the U.S. Securities and Exchange Commission, which Reuters reported has open an inquiry into S.A.C. trading practices.

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