Abstract
The use of cash-settled total return equity swaps, or TRSs, by activist investors to conceal stakes in public companies has come under increasing scrutiny in the USA and the UK. Due to imminent rule changes and increased judicial scrutiny, activist investors and potential takeover bidders should prepare for changes to disclosure requirements that are intended to bring greater transparency to the use of equity derivatives as a means of aggregating significant positions in public companies while avoiding disclosure under corporate or securities laws. In CSX Corporation v The Children's Investment Fund Management LLP et al.,1 a federal district court case decided in June 2008, CSX Corporation (one of the largest railroads in the USA) sued two hedge funds for failing to comply with Section 13 of the US Securities Exchange Act of 1934 and related rules....
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