A comment on the (latest) Goldstein case
Mar 4th, 2008 | Filed under: Hedge Fund RegulationPhillip Goldstein is at it again. The guy who single-handedly vacated the SEC’s hedge fund regulation rule has now threatened to sue his arch nemesis if it doesn’t lift its ban on hedge fund advertising immediatley. According to Investment News,
“Mr. Goldstein, principal of Bulldog Investors LLC in Saddle Brook, N.J., gave the SEC an ultimatum: Either issue him a no-action response by last Friday, allowing him to open his hedge fund website to the public, or he would file suit and let the courts determine if the securities laws violate the First Amendment.”
According to the website Archive.org, which copies websites from across the Internet for historical posterity, the Bulldog Investors website has been in cryogenic suspension since the beginning of last year when the Massachusetts Secretary of the Commonwealth William Galvin accused Goldstein of providing fund information to a non-qualified investor (for the record, he says it was a ”sting” operation). Since then the firm’s website has read simply “Site is currently being updated. Please check back soon. Thank you.” But Archive.org also shows what the site looked like before the latest brouhaha developed. While it’s not immediately clear if this archived version of the website contains the information that raised the ire of the SEC, its existence alone raises certain questions about the ability of the SEC to effectively control information in the Internet age.
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[…] Post Script: In all seriousness, though, state action to prevent communication with non-accredited investors sounds a lot like the brewing feud between Massachusetts and hedge fund manager Phil Goldstein over his website (see related posting). […]
The point about secrecy and no SEC oversight has nothing to do with protecting investment positions, but preventing real long term analysis about the returns of a fund relative to systemic risk. In simple language, is the hegde fund simply gambling with huge leveraged positions that if went badly could never pay back? Can you say Mortgage Backed Securities and Naked Short Selling…………