By BLOOMBERG

LOS ANGELES • Activist investor Bill Ackman (picture) and his estranged former collaborator in a 2014 hostile takeover bid for Botox-maker Allergan Inc will likely face a jury trial next month over claims they engaged in insider trading.

US District Judge David Carter issued a tentative ruling at a hearing last Friday, denying a request by Ackman and Valeant Pharmaceuticals International Inc to throw out the allegations by Allergan shareholders.

They claim they were tricked when Ackman bought their shares in the secret knowledge Valeant was planning a hostile bid.

The case turns on whether Valeant and Ackman’s Pershing Square Capital Management were planning as early as February 2014 to take their offer directly to Allergan’s shareholders rather than to pursue a negotiated merger with Allergan’s management.

It also depends on whether Pershing Square was really trying to buy Allergan instead of just helping to facilitate Valeant’s bid. The hearing in Santa Ana, California, on the parties’ motions for summary judgment adjourned without the judge issuing a final ruling.

Even if the case proceeds, the judge’s decision at this stage can help both sides evaluate their positions and provide a foundation for a negotiated settlement. The vast majority of shareholder lawsuits are settled before trial.

Based on comments from Valeant lawyer John Hueston during the hearing, the judge seems to be siding with the Allergan shareholders on the question of whether Ackman and Valeant took “substantial steps” toward a tender offer, a necessary condition for illegal insider trading, before Ackman started quietly acquiring Allergan shares in late February 2014.

Likewise, the judge in his tentative decision appeared to agree with the shareholders that Ackman wasn’t a co-offeror in the Allergan bid and as such exempt from prohibitions against insider trading.

If so, that would mean that the judge may find Ackman and Valeant are liable for insider trading as a matter of law and the jury trial will focus only on the amount of damages they owe the Allergan shareholders.

Hueston tried to persuade Carter to let a jury decide whether Ackman and Valeant were working on a tender offer rather than a merger of equals from the start of their partnership.

“Let the argument proceed before a jury and have a fair fight there,” Hueston said to the judge.