In social psychology, the “bystander effect” refers to the phenomenon in which no one person will help when a group of people witnesses a bad act. And in economics, the free rider problem suggests that a person generally will avoid taking actions, even socially beneficial ones, where the person bears the cost of that action but the benefits are widely dispersed. Both theories have been robustly proven in experiments and are generally applicable: most people are, quite rationally, bystanders and free riders. But not Philip Goldstein. The Principal of Bulldog Investors successfully challenged the 2004 hedge fund adviser registration rule, is currently challenging the constitutionality of Section 13(f) of the Securities Exchange Act of 1934 and is challenging an allegation by the Secretary of the Commonwealth of Massachusetts that the Bulldog website, together with an e-mail sent in response to an inquiry from a Massachusetts resident, constituted an illegal “offer” of unregistered securities. On July 2, 2010, in the action brought by the Secretary, the Supreme Judicial Court (SJC) of Massachusetts ruled against Goldstein. The Hedge Fund Law Report has published two articles on that decision. See “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, Vol. 3, No. 28 (Jul. 15, 2010); “The Bulldog Decision: Implications for Hedge Fund Managers and the Massachusetts Securities Division
,” Hedge Fund Law Report, Vol. 3, No. 32 (Aug. 13, 2010). In this letter to the editor, Goldstein identifies and discusses shortcomings in the SJC’s legal analysis and in Hedge Fund Law Report’s coverage of the case.