Bulldog II: SJC Eliminates First Amendment Challenge to Securities Violations Found by the Massachusetts Securities Division


A decision by the Massachusetts Supreme Judicial Court (“SJC”) on September 22, 2011, lays to rest the Secretary of the Commonwealth’s finding that a hedge fund manager, Bulldog Investors General Partnership (“Bulldog”), and its principals, violated the Massachusetts Securities Act through its operation of an interactive website that provided investment information to all visitors. In this decision, the SJC rejected the hedge fund’s argument that the Secretary’s order violated the hedge fund’s First Amendment right to communicate information to consumers.

The Bulldog facts are straightforward. Bulldog maintained an interactive website through which any visitor could view an opening page, a “press room” containing links to news articles and a printable brochure that described its funds. After clicking a button confirming the visitor’s agreement that the information provided was not a solicitation, the visitor was invited to complete a registration form that sought the visitor’s contact information. A Massachusetts resident completed this form and a Bulldog employee responded with an email that attached more detailed information on Bulldog’s funds, including press articles, a presentation about Bulldog’s investment philosophy, managers, investment vehicles, and performance, and a letter that, among other things, compared fund returns to the S&P 500. At no point, did Bulldog confirm that the Massachusetts resident was financially accredited.

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