Hey, SEC targets: Need a hedge fund handout?
By Barney Gimbel

(FORTUNE Magazine) – If the SEC has broken down your door, seized your files, and frozen your bank accounts, help may be on the way--courtesy of hedge fund magnate Kevin Kelly. It all started in early February, when Kelly and his two former partners at Northshore Asset Management, a hedge fund in Chicago, were indicted for allegedly putting $37 million of investor money into shaky companies they had a stake in. Since then Kelly's bank accounts have been locked up, his company broken up, and his name splashed across the papers. All for what he says are bogus charges. "The way the SEC goes after people would scare most Americans," Kelly says. "They're thuggish. And the only way to keep the SEC in check is to have the money to fight back." (The SEC declined to comment.) Given that his own cash was not at his disposal, he, along with his lawyer and a close friend, recently set up the Alternative Investment Alliance, a 501(c)3 nonprofit foundation with the sole purpose of helping fellow accused fraudsters battle the SEC. Kelly claims fellow hedge fund types and a large investment bank plan to donate generously, and the group has even scheduled a celebrity golf fundraiser in Chicago later this summer (no celebs are confirmed as yet). While the foundation's first move will be to pay for Kelly and his partners' defense, they will consider bankrolling anyone indicted by the SEC. Given how fast that group is growing, they'd better hope for lots of celebrity golfers. -- Barney Gimbel