Elliott Management sues US SEC for records on swaps rules

By Svea Herbst-Bayliss and Jonathan Stempel

(Reuters) – Elliott Investment Management, one of the world’s biggest hedge fund firms, on Friday sued the U.S. Securities and Exchange Commission to obtain more information about rule proposals that could affect how activist firms like Elliott do business.

In a complaint filed on Thursday in the Washington, D.C. federal court, the firm founded by billionaire Paul Singer accused the SEC of failing to hand over records that it believes could shine light on its rulemaking process.

At issue are proposed rules that would, among other things, require greater disclosures of large security-based swap positions.

Some investors use swaps as a means to build stakes in companies without tipping off others, which could make investing too costly.

Elliott said that while some rule changes have been made, “key” portions remain under review.

“The SEC is unlawfully withholding … information to which Elliott is entitled and for which no valid disclosure exemption applies or has been properly asserted,” Elliott said.

The SEC did not immediately respond to requests for comment on Friday. Elliott declined additional comment. Bloomberg News reported earlier about the lawsuit.

Last month, the SEC said it would give activist hedge funds and other investors just five business days, down from 10 days, to reveal when they have bought more than 5% of a company’s stock.

In June, the regulator strengthened rules intended to prevent anyone in the security-based swaps market from manipulating prices.

Founded in 1977, Elliott managed about $59.2 billion of assets as of June 30. It is based in West Palm Beach, Florida. Singer’s net worth is $6.1 billion, according to Forbes magazine.

The case is Elliott Investment Management LP v SEC, U.S. District Court, District of Columbia, No. 23-03290.

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