Third Point entwined in rumor probe

August 20, 2008 | By Jim Kim

When Third Point--the hedge fund operated by the well-known Daniel Loeb--registered as an investment adviser last year, the SEC undertook an audit and noted that managers often talk to managers at other hedge funds, notes the Financial Times. In a letter to shareholders, the fund says that the probe has since been upgraded to a formal investigation, which may be connected to the SEC's in-progress look at rumor-mongering and whether the practice has harmed various companies. Ex-Bear Stearns executives aver they were victimized. Loeb writes that the practice is legally sound, giving his managers a chance to "test our hypotheses and refine our thinking," and is thus in the best interest of their customers. We'll see where this goes.

For more:
- here's the letter to investors