Regulatory Interest Rising In Gotham Partners/Pre-Paid Legal, Says Reuters

Pre-Paid Legal Services Inc., the company whose stock price rose steeply after the Gotham Partners hedge fund published a flattering, counter-consensual research report on the company in November last year, has been ordered by US regulators to hand over documents, according to a report by Reuters. The company has reportedly said it is now part of an informal inquiry by the Securities and Exchange Commission. There are concerns in the hedge fund industry that the regulatory probe could widen and turn into a broad-based investigation into the possibility that funds use research reports to push stock prices up or down.