Bulldog Seeks Rehearing Of First Amendment Case

Oct 10 2011 | 12:03pm ET

It's no accident that Philip Goldstein named his hedge fund Bulldog Investors: The man is not one to give up when he thinks he's right.

Goldstein has asked Massachusetts' highest court to reconsider its ruling last month that Bulldog's free speech rights were violated when the state's Securities Division fined it for providing information to a non-accredited investor.

In its petition for a rehearing, Bulldog argues that it never made an offering when it offered information on its Web site and via e-mail. Given that "no illegal transaction is being promoted," the New Jersey-based hedge fund argues that "it is undeniable that these rules, on their face and as applied, prohibit the non-rich from reading the same non-misleading information about unregistered securities that the rich can read."

"The court's erroneous ruling is evidenced by its flawed reasoning, but the apparent and more fundamental cause of the court's error is its unwillingness to enforce First Amendment principles as rigorously when the offending law is a federal and a Massachusetts securities regulation as it does when the challenged law does not regulate securities," Andrew Good, Bulldog's lawyer, wrote.

Bulldog ran into trouble four years ago when it e-mailed information to a non-accredited investor. The hedge fund was slapped with a  cease-and-desist order and ordered to pay a $25,000 fine.

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