Hedge fund manager says plans to sue SEC on ads

BOSTON, March 3 (Reuters) - Hedge fund manager Philip Goldstein, who helped overturn a rule requiring more information from managers, plans to sue U.S. financial regulators for the right to advertise their portfolios.

"We have three options, and suing the U.S. Securities and Exchange Commission is the best course," Goldstein told Reuters on Monday. He said he plans to file the suit later this month in U.S. district court in Washington or New York.

Currently, decades-old rules prohibit hedge funds from marketing themselves for fear of luring less affluent investors into funds using more aggressive trading techniques that can lead to large gains or huge losses.

"We are not asking regulators to be allowed to sell to unqualified investors. We are simply saying that they are not going to be harmed by getting the information," Goldstein said about his plan to make funds' Web sites available to all.

The SEC's restriction on advertising keeps most hedge funds' Web sites off limits to anyone but registered clients. Hedge fund managers also shy away from discussing returns for fear they might be accused of trying to market their funds improperly.

Goldstein won a battle with the SEC in 2006, when a court overturned the rule that would have forced most hedge funds to register with the agency and allow its accountants to swoop in for random reviews. By registering hedge funds, regulators hoped to cut down on fraud at a time the industry is growing. (Reporting by Svea Herbst-Bayliss; editing by Jeffrey Benkoe)