NEW YORK, March 30 (Reuters) - Solengo Capital, a new hedge fund founded by former Amaranth Advisors traders, threatened court action against a Wall Street-focused Web site that refused to remove Solengo marketing documents, according to the site.
Solengo told DealBreaker.com it “will seek a temporary restraining order ... to prevent continued publication,” according to the Web site, www.dealbreaker.com.
The blog said the materials are of legitimate news value and refused to remove them.
“We think it’s valuable to our readers and the public to be able to see the information in it,” said John Carney, DealBreaker editor, in an interview on Friday.
The legal dust-up is the latest stemming from the abrupt implosion of $9.3 billion hedge fund Amaranth last year, which shocked investors and raised awareness of hedge fund risk.
The recent founding of Solengo by some of the energy traders blamed for the $6 billion in losses that caused the Amaranth collapse has also generated controversy.
Carney, a former corporate lawyer, said his site plans to contest any legal challenge. “We’re willing to take it as far as it merits. I don’t expect to defy a court order or go to jail for it, however.”
Officials from Solengo and its attorneys could not be reached for comment. Some legal experts said, however, they were skeptical about the merits of DealBreaker’s argument.
The legal standoff comes a day after a San Diego pension fund, which that invested $175 million into Amaranth, sued the firm and the head of its former energy trading operations, Brian Hunter, who founded Solengo.
Several legal experts said Solengo has a right to keep copyrighted material confidential, although they said news organizations generally have a right to report on the content of such materials.
“There are valid copyright issues,” said David Schulz, a First Amendment lawyer for Levine Sullivan Koch & Schulz. “If it is newsworthy and a matter of legitimate public concern, the law gives significant leeway to report the information. But if they are taking the whole document, that would weigh in favor of Solengo.”
Scott Berman, a hedge fund lawyer for Friedman Kaplan Seiler & Adelman, agreed that Solengo could have a case.
“If these documents are like most offering memoranda, they would have a legitimate claim,” said Berman. “It’s important for them to get the confidential information out of the marketplace.”
Hedge funds and other private asset pools are barred from publicly discussing fund-raising, performance and similar issues in the media and other public forums and can be blocked by regulators from fund-raising if violations are found.
DealBreaker posted a letter from Jonathan Cogan, a Kobre & Kim lawyer who represents Solengo, on its site this week, claiming copyright and other violations.
“Public disclosure is illegal and improper,” the letter said. “It contains confidential information that is proprietary in nature about the company’s future plans.”
“Accordingly we demand that you remove this posting from your Web site immediately,” it added. “Solengo Capital may be forced to go go court in order to protect itself from future irreparable damage being caused by this posting.”