(The following story by James Quinn appeared on The Telegraph website on May 24.)
LONDON — Secretive hedge fund manager Chris Hohn is set for a court showdown with American railway operator CSX today over his Children Investment Fund’s (TCI) bid to install five of his nominees on the US group’s board.
Mr Hohn and TCI will stand accused, along with a number of other co-defendants, of violating US securities laws in a New York court in his bid to gain control of the company.
CSX, whose board is desperately fighting to retain control of the company, which operates the largest commercial railway in the eastern United States, claims TCI broke securities laws requiring disclosure of shareholding agreements between it and numerous banks, and its intention in proxy fights.
TCI has denied the charges, and has said it made it all the required disclosures.
CSX will focus in court on a series of unusual share movements around February 21, the date by which investors needed to own a share in order to be able to vote at CSX’s annual meeting next month.
Lawyers from leading New York law firm Cravath Swaine will tell the court that CSX has approximately 400m shares in issue, and that within ten days of February 21, 37m shares moved into the hands of TCI counterparties at two major Wall Street banks.
Over the following fortnight, 20m of those shares were sold by those counterparties, leading CSX to suspect that the shares were being moved for the purposes of influencing the vote.