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Elliott fund goes to court to keep results secret


Date: Friday, August 20, 2010
Author: Emily Chasan, Reuters

Hedge fund Elliott Management Corp sought an emergency court order on Thursday to allow it to investigate who leaked its latest investor report to industry magazine Absolute Return + Alpha, and said publication of its results would hurt its competitive edge.

In court papers, filed in the Supreme Court of the State of New York in Manhattan, Elliott said its June 30 letter to investors had been leaked to the magazine, and that it wanted the court to give it emergency authority to investigate the magazine and find out who had violated Elliott's confidentiality agreement and leaked the letter.

Elliott said it was contacted by the magazine and learned it could publish the full letter as soon as Friday. Michelle Celarier, editor of Absolute Return + Alpha, declined to comment.

Elliott, which is run by Paul Singer and specializes in distressed investing, said its investor letter contains its second-quarter positions, and that its publication would cause "significant harm to Elliott and negatively affect its competitive advantage" in the market.

"If other participants learn the particulars of Elliott's positions and results with respect to those positions, it would impact negotiations Elliott has with those parties ... affecting Elliott's future results," the hedge fund's director of communications, Scott Tagliarino, said in the court papers.

In the court papers, Elliott said each of its letters is watermarked with the identity of the person who is accessing it so the time and date when each person accessed the letter can be tracked.

Elliott said it wanted the information from Absolute Return + Alpha within two days so that it could pursue damages and an injunction against the leaker.

Hedge funds typically send letters to their investors every quarter to update them on their results, and while some expect them to leak out, others have gone to great lengths to try to keep them secret. But it is rare for a fund to go to court over the leaking of an investor letter.

In 2007, Solengo Capital Advisors, a hedge fund run by former Amaranth Advisors trader Brian Hunter, similarly took the website DealBreaker.com to court, claiming that the site violated copyright law by posting Solengo's prospectus. The case was settled several months later.

Earlier this month, Absolute Return + Alpha published details from Singer's latest letter, which said that Elliot's flagship fund was up 0.4 percent in the second quarter of 2010 and up 5.3 percent in the first half of the year. The magazine quoted Singer as saying that the current economic situation has not produced the type of new, complicated, restructuring situations the firm likes to invest in.