Ackman, Valeant Target Of Lawsuit; Will Allergan’s Pyott Join Plaintiffs?

A new class action lawsuit is doing what some had anticipated government regulators would do: charging that Bill Ackman, his hedge fund, Pershing Square Capital Management, and Valeant Pharmaceuticals Intl Inc, engaged in insider trading.

The suit, brought by investors who sold stock between February and April, a period when Ackman's Pershing Square Capital Management had knowledge of a pending acquisition of Allergan Inc. and discreetly purchased nearly 10% of Allergan's stock. Part of Ackman’s strategy was to use high yielding derivatives contracts. These contracts to move the most in value over short periods of time on strongly positive news.