Massachusetts slams barn door, watches horse run down the lane to New York
May 22nd, 2008 | Filed under: Hedge Fund Regulation
Stories of regulatory infractions are usually a great antidote for insomnia. But this one’s a hum-dinger.
The Secretary of State for Massachusetts William Galvin issued a cease and desist order to a fund manager earlier this week after a 2 week investigation that turned up a panoply of alleged regulatory breeches dating back over the past decade.
The tale would end there if it weren’t for the fact that any story including the words “Galvin” and “hedge fund” is sure to generate a lot of interest. As you may recall, this was the same William Galvin who mixed it up with hedge fund manager Phil Goldstein recently over his unsecure website (see related posting).
So it would appear that this just might be another attempt to draw (not entirely unwarranted) attention to potential pitfalls of not requiring all investment managers, including hedge funds to register with authorities. But while it appears as though the manager in this case may have indeed been in breach of securities regulations, we have trouble believing for a minute that this case was randomly targeted by the state.
In addition to allegedly selling units of his fund to investors that did not meet minimum wealth levels, the complaint suggests that the manager, Michael Regan, may have also lost all investors’ money. The question remains, however, was any loss a result of a lack of some kind of oversight?
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