Newspaper article The Florida Times Union

CSX Facing Suit over Ethics; among the Charges Are Accusations of Insider Trading and Legal Lapses

Newspaper article The Florida Times Union

CSX Facing Suit over Ethics; among the Charges Are Accusations of Insider Trading and Legal Lapses

Article excerpt

Byline: TIMOTHY J. GIBBONS

A hedge fund accused by Jacksonville-based CSX Corp. of violating security laws during its feud with the company has struck back with a countersuit, accusing the railroad company and its chief executive officer of a variety of legal and ethical lapses, including using insider trading to benefit its leadership.

"CSX Corp. and CEO Michael Ward have committed violations of the federal securities laws through materially false and misleading disclosures," charges the lawsuit filed Friday by The Children's Investment Fund, a British hedge fund that is fighting to add members to CSX's board and change the company's direction.

The hedge fund's suit, filed in the U.S. District Court for the Southern District of New York, came in response to a suit the railroad company filed last month against TCI and 3G Capital Partners, another fund that is working closely with TCI. That suit - which TCI called the "latest step in a long series of scorched earth tactical maneuvers" by the company - charged the hedge funds with misrepresenting the size of their stakes in CSX, thereby violating security laws and misleading shareholders.

The countersuit, CSX said in a statement, is an attempt to distract shareholders. TCI's claims are "without merit," the statement said.

The charges are the most recent move in a fight stretching back months that has led the British fund and U.S. railroad to be summoned before Congress. TCI, which has a history of winning fights in Europe, is looking to place five candidates on the railroad's board at its next annual meeting. …

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