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. Last Updated: 07/27/2016

Telenor Accuses Alfa of Insider Trading

OSLO -- Norway's Telenor has filed a lawsuit in a U.S. federal court against Alfa Group companies, alleging they engaged in insider trading in mobile operator VimpelCom, Telenor said Thursday.

The lawsuit filed Wednesday in the U.S. District Court for the Southern District of New York is the latest twist in a long-running boardroom and courtroom battle between the groups over VimpelCom, in which the two are the biggest shareholders.

Telenor, which owns 29.9 percent of VimpelCom's voting stock, asked in its filing to the court that Alfa Group companies be barred from buying more shares in VimpelCom and be forced to sell shares that Telenor said Alfa bought illegally. Alfa Group, the investment vehicle of billionaire Mikhail Fridman, owns 42.4 percent of the voting shares in VimpelCom.

Telenor alleged in a statement that Alfa Group companies engaged in "multiple violations of U.S. securities laws in connection with their purchase of 9.5 percent of mobile operator VimpelCom from August 2006 to May 2007, including at least two instances of insider trading."

Telenor brought the suit against Alfa companies Altimo, Eco Telecom, CTF Holdings, Crown Finance and Rightmarch, it said.

Officials at Alfa Group's Altimo telecoms arm said they were reading Telenor's lawsuit and declined comment.

The announcement comes two days after Telenor and VimpelCom said the Supreme Arbitration Court had ruled against Telenor and upheld VimpelCom's acquisition of Ukrainian Radio Systems, which Telenor had opposed.

Telenor and Alfa have been on a collision course since the Russian company decided, against the Norwegians' wishes, to expand into Ukraine, where it rivals Kyivstar, an operator jointly owned by Telenor and Alfa's Altimo.

Telenor has repeatedly said it wants a "divorce" from Alfa.

"This case is a step in the direction of a final and decisive end to cooperation. A divorce is unavoidable," Carnegie analyst Espen Torgersen said.

"On two occasions, Alexey Reznikovich, Oleg Malis and Mikhail Fridman, the Alfa Group members of VimpelCom's board, received advance notice of VimpelCom's financial results and a proposed dividend, and caused Eco Telecom and the other Alfa Group defendants to purchase VimpelCom American Depositary Shares and shares in the open market prior to VimpelCom's public disclosure of such information," Telenor said in its statement.

The document filed to the court also named those individuals in connection with the share trades.

"Defendants should be barred from acquiring more VimpelCom shares and [American Depositary Shares], and should be barred from voting all VimpelCom shares and ADSs acquired in the course of their illegal activities," Telenor said in its filing to the court.

Telenor also asked the court to rescind purchases of VimpelCom shares by Alfa Group companies in what it called an "unlawful tender offer" and to force the defendants to sell those shares to unaffiliated third parties.

"Defendants would otherwise be able to profit from their failure to comply with the United States securities laws, to the detriment of holders of VimpelCom securities," it said.