MSN MoneyCentral- The long-standing rule against hedge funds advertising is facing its first significant test, as the industry awaits a ruling on whether a hedge fund manager broke the law by e-mailing performance data in response to a query sent to his website.
William Galvin, the Massachusetts securities regulator, in January lodged an administrative complaint against the manager, Phillip Goldstein. The hearing was in April and a decision is expected imminently.
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Mr Goldstein last year derailed, through court action, the Securities and Exchange Commission’s attempt to force hedge funds to register with it. He told the Financial Times that he plans to make the advertising complaint against him a freedom of speech issue.
He expects the ruling to go against him and he has already sued the Massachusetts regulator, saying he has the right under the First Amendment to post such data on his website. The case will go to court as soon as the administrative ruling is announced.
Mr Goldstein said: “The State cannot bar truthful communication . . . I have never heard of a successful case against a hedge fund, where there was no harm done. If I said you can invest in our fund with no risk, then we should have been prosecuted, but someone asks me what my performance is, and I can’t say?”
