The Securities and Exchange Commission (SEC) voted to allow a wide variety of companies far greater scope to privately sell their securities to US investors. Importantly, hedge funds and private equity funds were permitted to come along for the ride.A good indicator of a firm's ethics is how they behave under stress. The Carlyle Group pled puffery in a SemGroup shareholder lawsuit. Carlyle defended its strong sales pitch to SemGroup shareholders and Michael Huffington, who lost $20 million in a "safe" investment in Carlyle Capital Corporation.
This opens the door to the possibility of mass mailing, email blasts and cold calling, as well as to full page ads in newspapers and magazines or commercials on Sunday morning television.
Carlyle won't tell these stories when it comes time to push new funds on smaller investors. How long before their puffery defense is used in another investor lawsuit?
