TCI Countersues CSX, Alleging Insider Dealing

Trains Magazine General Discussion
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TCI files countersuit against CSX
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, the Jacksonville, Fla., Times-Union reports.

“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.

The most serious claim in the countersuit is that the company granted stock to employees right before releasing information that caused the stock price to jump.

In May, executives of the company were given stock grants shortly before the company announced an increase in its stock repurchase program and dividend, an increase in c

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TCI has its greedy little hands reaching for the CSX treasury, nothing else.

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BINGO!

Probably the most telling reason to believe that is that TCI says that CSX is spending too much on maintenance when pretty much anybody who actually knows something about the railroad says CSX isn’t spending enough…

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this is the problem with “outlanders” investing in something…meaning investment firms buying industries…look at Serberus (sp) buying Chysler…big plans big promises…more layoffs “…to make it profitable”

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Which is precisely why TCI wants to drag this into the courts. What on earth do jurists know about operating a transportation company?

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the same thing they know about trespassers elecocuting(sp) themselves…diddly-poop

how can a judge say…" unreasonable ammount of time for RR cars to be sitting"?..talking about the 24 million dollar suit against Amtrak\NS

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For anyone who wonders what all the of the hullaballoo is all about…I suggest you rent a copy of the movie ‘Wall Street’ with Michael Douglas…how to rape a company from the inside out!

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TCI is another one of those HEDGE FUNDS that wants to take control, RAPE, PILLAGE, and PLUNDER a company.

TCI wants to take a gamble at putting in management that is friendly to itself and then plunder the vast savings that CSX has, then cut loose. Kind of like the “Men who loved trains” history lesson. All should read this book and look at the past history of what the Railroad went through. Then the next round of selling off property and giving away jobs to lower paying short lines will begin.

If TCI is allowed to run CSX it will run it in the ground. I believe that large portion of CSX stock should be given to it’s employees. In theory, if you give generous amount of stock to your employees, the employees will want to work harder. Isn’t this called a “Productivity Bonus” BLE guys negotiated this in their last contract. This may put off any hostile take over from outside forces. This seems to have worked in the past for a few airlines a while back. [:-^]

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TCI or The Childrens International Fund is run by the Brits and the Arabs…Any idea how much and were does the intrest income on the Fund go to what childrens projects?

I mean while most Americans have a bake sale or a 50/50 raffle to benifit there kids school trips the wealthy Brits sell hedge fund shares door to door?

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cant answer that but read jp2153’s post…pretty much sums it up i think…why is a “international childrens fund” buying a US railroad??? thats like UNICEF buying GM

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Although the aggressive group does indeed sound like a service to “widows and orphans,” clearly it is no stranger to hardball takeovers. If CSX were truly a major component of a pension fund’s holding, the fund would have bought the stock hoping for appreciation in capital gains, or for interest due. Which is to say it probably would not have bought CSX in the first place, since muni. bonds and many utilities pay far more in dividends and do offer modest chance of appreciation.

This is a hedge fund and generally deals either in junk or in companies it believes are undervalued, or would be with a management change.

I know it’s confusing, but the last thing most companies want is to have to guarantee an increasing rate of returns on its dividends, or even a level one. Traditionally N. American railroads pay a low-ish dividend because they need so much of their revenues for infrastructural enhancement – MOW, extending siding, more efficient locomotives, etc. - a. s.

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Well TIIEF CREIF or the Teachers Pension Funds owns CSX Stock and there director Elizebeth Bailey is a Director at CSX…Cal Pers or the California Pension Fund owns stock and even the Hobo Foudation has a few shares held in trust (go figure)…

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Absolutely true, but you don’t see them trying to take over the company.

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It’s The Children’s Investment Fund. I’m guessing that the “children” being referred to are those belonging to multi-millionaires.

Jeff

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I think it was in another forum or a thread in here last fall. A guy that knew something about TCI said, they had a history of buying up stock in a company. Then loading the board with their supporters, taking the profits and investing little back into maintenance or development, till there’s nothing to take. Then selling off what ever is left.

inch

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This fund tried to do the same thing to Dutch bank ABN AMRO. They managed to drive the bank into the hands of Fortis, Royal Bank of Scotland and Banco Santander. ABN AMRO is in the process of being split up among the 3 owners. TCI probably made a lot of money owwning a few stocks in ABN AMRO…

Your guess is as good as mine as to what a company driven into a corner will do to defend itself. Maybe Warren Buffet has some billions left somewhere to help CSX fend off TCI?

greetings,

Marc Immeker

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Depending upon your politics, Cerberus Capital is an interesting company. John Snow, who a lot of people believe sleepwalked through his stay at CSX and then at the Treasury, is Chairman. Dan Quale is a Vice President and in charge of something or another. My guess is the folks at Mercedes are just hoping a whole lot of time passes between the give away to Ceberus and Chrysler’s demise.

It seems to me CSX’s record is better than its reputation. In terms of reportable accidents, for example in frequency expressed in number per million train miles, they have been in the middle of the Class I roads for several years now. Nevertheless, we see posts here to the effect that “Well, CSX has gone and done it again.”

I’m not very familiar with thoughts and reputations among the Wall Street crowd. Does their regard for CSX seem worse than the facts demonstrate? We think TCI is a financial wolf; have they spotted the weak sheep among railroads?

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I guess that another way to look at this is, given the way the top brass (and ex top brass example: Snow) have lined their own pockets with “pillage”, the stock holders are about to take their turn to do likewise.

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No one could prove that this so-called benevolent trust would get their own executives into the board and pull what Stuart Saunders did at PRR and later Penn Central: raid the line revenues to invest elsewhere and not put any money back into physical plant – but that would be my fear if I were in management.

If THE WRECK OF THE PENN CENTRAL is too big a deal to read, try the appropriate sections of the book MAIN LINES: what happened to PRR and PC is an almost textbook action of how to raid a railroad and keep things superficially looking rosy until the railroad portion of the conglomerate crashes.

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The Penn Central bankruptcy was caused by a lot more than raids on the company treasury. A better example of what might happen would be the initial bankruptcy of TWA shortly after it was bought out by Carl Icahn. The story goes that Icahn was hoping to extort some “greenmail” from the firm in return for not going through with a hostile takeover. As it turned out, TWA’s Board of Directors decided that his offer was good for the stockholders and sold the airline to him.