Solengo Imbroglio: A Plausible Theory

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[Confidentiality: This blogpost is confidential. It discloses proprietary information regarding DealBreaker, its reporting strategies and its future plans. It may not be read by Solengo Capital or any of its representatives or disclosed by any party to Solengo Capital, its representatives, the kids in skeleton costumes from the Kobra Kai dojo or their next of kin.]
One of the questions that we keep getting asked about the mess that Solengo has made of its campaign to have its marketing brochure removed from DealBreaker and other blogs—including FinAlternatives.com, a topflight hedge fund newsletter* that is sticking to its guns and keeping the brochure online—is this: why do they care?
We’re not really in the business of trying to figure out why people do the crazy things they do, especially when these things involve threatened lawsuits against us. Let them come up with their own excuses. But we can’t help ourselves here.
Under the rules that exempt hedge funds from cumbersome SEC registration regulations, hedge fund managers are barred from marketing their funds to the general public. This bar is often interpreted strictly enough that many hedge fund managers refuse to discuss fund performance or future plans with the media, and certainly includes posting brochures on the internet. Most hedge fund websites are password protected to reserve this information for accredited investors.
It may be that Solengo believes that anything less than threats of lawsuits will be viewed by regulators as cooperating with our disclosure of the marketing brochure.**
Note to the SEC: we aren’t cooperating with Solengo. The brochure was published here because it was news that the former Amaranth traders were launching a new fund, and because we wanted to invite comment on the materials from our readers.
*Full disclosure: Deirdre Brennan, the editor and publisher of FinAlternatives, is a friend of DealBreaker’s.
**Credit: Thanks to several of our commenters who have made this point. We thought it was time it got promoted to a full post.

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