District Court Holds that Long Party to Total Return Equity Swap May be Deemed to Have Beneficial Ownership of Hedge Shares Held by Swap Counterparty

In a case of first impression, with potentially important consequences for activist hedge funds, the US District Court for the Southern District of New York ruled on June 11, 2008 that two hedge funds that had accumulated substantial economic positions in publicly-traded railroad operator CSX Corporation, principally via cash-settled total return equity swaps, were deemed to have beneficial ownership of the hedge shares held by their swap counterparties.

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