Massachusetts’ Lawsuit Against Hedge Fund Manager Bulldog Investors and Its Principal, Phillip Goldstein, Survives Free Speech Challenge

On September 30, 2009, the Massachusetts Superior Court ruled that an administrative action by Massachusetts securities regulators against activist hedge fund manager Bulldog Investors, its principal Phillip Goldstein and its affiliated funds, for selling unregistered securities over an Internet website, did not violate the defendants’ First Amendment rights.  The court found that the regulations challenged by the defendants as an unconstitutional abridgement of their right to freedom of speech fulfilled the criteria for testing such a First Amendment challenge as set forth by the United States Supreme Court in Central Hudson Gas & Electric Corp. v. Public Serv. Comm’n, 447 U.S. 557, 561 (1980).  As required by that decision, the court found that the regulations advanced the state’s interest in protecting the capital markets and did not intrude on speech any more than necessary to achieve that objective.  This article summarizes the background of the action and details the court’s legal analysis.

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