Morgan Keegan, the brokerage being sold to Raymond James Financial Corp., lost its bid to be dismissed from an $8 billion lawsuit by Canadian insurer Fairfax Financial Holdings Ltd.
New Jersey Superior Court Judge Stephan C. Hansbury in Morristown ruled today that there was more to the case than whether Morgan Keegan's analyst reports were free speech protected by the U.S. Constitution's First Amendment.
The suit, alleging investors conspired with analysts and researchers to drive down Fairfax's stock price, once included as defendants hedge funds SAC Capital Advisors LP, Third Point LLC and Kynikos Associates LP.
"There's more to this case than the statements made in a couple of reports," the judge said. "In terms of the plaintiffs' allegations, I'm satisfied they're not limited to the reports."
Fairfax, in its 2006 lawsuit, accused the funds of trying to drive down its stock in a so-called bear raid. The remaining defendants, including New York hedge fund Exis Capital Management Inc., have argued the case doesn't have enough connection to New Jersey to allow Fairfax's anti-racketeering counts, which allow for tripling the $8 billion in claims. Toronto-based Fairfax brought other claims in the suit.
Bruce Collins, a lawyer for Morgan Keegan, declined to comment on the ruling.
The case is Fairfax Financial Holdings Ltd. v. SAC Capital Management LLC, L-2032-06, Superior Court of New Jersey, Morris County (Morristown).
