Massachusetts High Court Rules that Website and Single E-Mail Communication to Massachusetts Resident Confer Personal Jurisdiction Over Philip Goldstein’s Hedge Fund Company in Administrative Proceeding
Hedge Fund Law Report
Massachusetts’ highest court has dealt a blow to activist investor Philip Goldstein’s efforts to broaden the ability of hedge funds to disseminate information about their operations and performance. Plaintiff Bulldog Investors General Partnership (Bulldog) had operated a website containing information about its investment products. A visitor to the site could register and receive “more specific information” about Bulldog’s funds. In November 2006, Massachusetts resident Brendan Hickey (Hickey) registered with the site. A Bulldog employee then sent Hickey a single e-mail with detailed information about Bulldog’s funds and offered to discuss the funds by telephone. As a result, in January 2007, the Securities Division of the office of the Secretary of the Commonwealth (Secretary) filed a complaint against Bulldog and certain employees and affiliates, accusing them of offering non-exempt, unregistered securities. Bulldog contested the proceeding, arguing that the Secretary did not have personal jurisdiction over the named respondents, that the information provided did not constitute an “offer” under Massachusetts law and that the enforcement action violated the respondents’ rights to free speech. The Supreme Judicial Court upheld the determination by the Secretary and lower court that jurisdiction was proper and that Bulldog’s e-mail to Hickey constituted an “offer” of unregistered securities under Massachusetts law. Bulldog’s free speech claims are being heard in a separate proceeding. We summarize the facts that gave rise to the administrative proceeding and the Court’s reasoning.