After his victory in striking down the Securities and Exchange Commission’s proposed hedge fund regulation rule, New York hedgie Philip Goldstein expressed confidence that he stands a good chance to win his next battle against the SEC. Observers say, however, that Goldstein’s challenge to Form 13F, which requires disclosure of stock holdings, may not be so easy. “It’s clearly more of an uphill battle,” attorney Irwin Latner of the New York-based law firm Herrick Feinstein, told Bloomberg News. “This time he’s not challenging the SEC, he’s challenging Congress.” Form 13F is a requirement set out in the U.S. Securities Exchange Act of 1934. In a letter submitted to the SEC Tuesday, Goldstein wrote, “There is no rational relationship between the disclosure scheme of 13F and any legitimate government interest.” Goldstein, whose firm Full Value Partners passed the $100 million AUM mark earlier this year and thus triggered the 13F requirement, says he expects the SEC will turn down his exemption request, and is threatening to sue. Goldstein says disclosure on the form is tantamount to revealing “trade secrets,” a move that he says could destroy his business. “The entire value of a trade secret lies in its secrecy,” according to Goldstein’s letter. “Once a trade secret is publicly disclosed, its owner loses its entire economic value even though the owner can continue to use it.” SEC exemptions to the form are not unheard of. Warren Buffett got them for a few of his Berkshire Hathaway investments, and other hedge funds have been able to keep all their equity investments under cover as well. Whether Goldstein’s firm, which invests in stocks of undervalued companies, qualifies remains to be seen. In any case, he has until Feb. 14 to file the form.
