The hedge fund industry should have its own version of the American Civil Liberties Union or the Washington Legal Foundation to fight bad laws and unfair regulations, Bulldog Investors LLC Principal Phillip Goldstein said. Such a group, according to Mr. Goldstein, could pursue legal action against federal and state governments on behalf of the HF industry, so HF firms don't have to go it alone when they run up against a law that no longer works as it was first intended.

"There are a lot of bad regulations out there, a lot of dumb ones that are either unconstitutional or they make no sense," said Mr. Goldstein. "It's a way for people to have influence without putting their neck on the line, or without having the negative publicity of taking on a regulator." Mr. Goldstein said at a conference in San Francisco that he would support a legal advocacy group dedicated to the hedge fund industry, and suggested a name: the Rational Regulatory Policy Institute. In an interview on April 25th, Mr. Goldstein described the suggestion as "floating a trial balloon," and said that some in the hedge fund industry had expressed support for the idea.