Failure To Communicate Could Cost Zwirn

Sep 3 2008 | 10:46am ET

Hedge funds have run afoul of many a regulator, but it is not often that they find themselves under investigation by the Federal Communications Commission.

The FCC, better known for regulating (or attempting to regulate) Howard Stern’s mouth and Janet Jackson’s wardrobe, is looking into whether New York hedge fund D.B. Zwirn & Co. improperly transferred nine radio licenses, the New York Post reports.

Tama Broadcasting, which ran a group of radio stations aimed at the African-American community in Florida and Georgia, accused D.B. Zwirn of transferring the licenses to itself without FCC approval. The broadcaster defaulted on a $20 million loan from the hedge fund, which then forced Tama into Chapter 11 bankruptcy protection earlier this year.

D.B. Zwirn denies that it claims ownership over the licenses.

The hedge fund’s Straight Way Radio subsidiary has taken over programming the stations, pushing ad revenue up 50%. The Post also reports that Straight Way leases operations of the licenses from Tama.

If the FCC finds that the licenses were transferred to the hedge fund, the licenses could be revoked, seriously imperiling D.B. Zwirn’s effort to recoup its investment in Tama.

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