SEC sides with TCI

June 6th, 2008
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The SEC issued a letter supporting The Children's Investment Fund (TCI) in its legal dispute with CSX, the railroad company. CSX sued TCI for not disclosing its large stake in CSX acquired using equity swaps. Under 13D rules, investors are required to disclose their stake when they own more than 5% of a company. However, equity swaps do not give investors the right to vote or sell the securities, meaning that these positions do not have to be disclosed. In this case, TCI disclosed that it owned 8% of CSX in December 2007 but it had started building this through swaps starting in October 2006. This strategy is often used by activist investors to build large stakes in companies. The SEC stated that an equity swap agreement does not confer any voting power over the shares and is generally not a basis to determine if there is a plan to avoid disclosing stakes.
For Detailed Investor Profiles on these Investors, click below:
The Children's Investment Fund Mgmt
Related People: Chris Hohn
Related Entities: Children's Investment Master Fund; Childrens Investment Fund LP; Childrens Investment Fund Management (UK) LLP; TCI; The Children's Investment Fund; The Children's Investment Fund Foundation

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