All That Glitters Is Not Goldstein

Date: Friday, February 2, 2007
Author: Dailyii.com

Hedge fund manager Philip Goldstein’s reputation as the man who single-handedly killed the Securities and Exchange Commission’s HF registration rule may get a little tarnished as he finds himself in a tangled Web with another regulator. William Galvin, Massachusetts’s secretary of the commonwealth and the Bay State’s version of white-collar crusader Elliott Spitzer, has charged Goldstein’s firm for basically allowing easy access to securities advertising on the firm’s Web site. "The usual manner to conduct such a private offering over the Internet requires the Web site to be password-protected is that only those prospective investors that the issuer has determined are properly accredited or sophisticated can access the advertising and offering materials," Galvin stated in his complaint. This, he says "constitutes an unregistered, nonexempt, public offering of securities in Massachusetts." The Bulldog manager says Galvin is barking up the wrong tree, arguing that his firm is being unfairly accused. "Someone posed as an investor to entrap us into giving information," Goldstein told reporters. The Bulldog Web site, according to Galvin, has a disclaimer that information on it doesn’t constitute a solicitation, but notes that this "does not constitute an appropriate or adequate control over a publicly accessible Web site that displays advertising and/or offering materials for securities." Goldstein’s firm may not be the only one that Galvin would deem afoul of the law. Attorney Irwin Latner of the law firm Herrick Feinstein, said in a Bloomberg News interview, "If the regulators were to do a broad-based Internet search, they probably would find numerous violations, because it’s a gray area," adding that without being registered with the SEC, "there is very little information they can put on a Web site." Meanwhile, Goldstein has not yet responded to the complaint filed Wednesday, but did say, "we are not looking for a fight." By the way, the Bulldog Web site is down for now, with visitors greeted simply with "Our Web site is currently being updated. Please check back soon. Thank you."