Hedge Fund's Mercury Mess

A hedge fund is claiming it got ripped off when it sold a big raft of Mercury Interactive (MERQ) shares just before a big merger announcement.

Okumus Capital, an $800 million fund, has asked a New York state judge to order Goldman Sachs (GS) and Jefferies (JEF) to turn over the names of any customers who bought some 2.4 million shares of Mercury from Okumus Capital in late July.

The New York hedge fund alleges that some of the buyers may have been improperly tipped off that Hewlett-Packard (HPQ) was about to announce a $4.5 billion acquisition of Mercury. The hedge fund claims it lost $27 million by selling Mercury shares ahead of the announcement.

Okumus Capital, led by 36-year-old hedge fund manager Ahmet Okumus, sold Mercury shares on July 24 and July 25 at prices ranging from $37.97 to $39.11 a share. Hewlett's $52-a-share bid, unveiled after the market closed July 25, represented a 33% premium to Mercury Interactive's closing price that day.

"The buyers of MERQ from the Okumus Funds over that two day period made their purchases based on material non-public information (i.e. they knew in advance of the H-P acquisition)," says the court filing.

There's no allegation in the court filing of any wrongdoing by either Goldman Sachs or Jefferies. But the unstated implication in the legal filing is that someone tipped off customers and others on Wall Street about the deal, making Okumus Capital an unwitting seller.

Goldman Sachs served as the main adviser to Mercury Interactive in the transaction. Merrill Lynch (MER), which advised H-P in the deal, isn't named in the filing. Investment bankers at Jefferies aren't listed as having advised either company in the transaction, according to Dealogic.

Goldman Sachs and Jefferies declined to comment. Bruce Paulsen, a partner with Seward & Kissel who represents Okumus, declined to comment beyond the filing.