Blackstone Gets Served

A public shareholder in Blackstone Group has filed suit against The Blackstone Group, alleging that the firm violated federal securities laws through statements made in its IPO documents last year. The plaintiff is seeking class-action status, and accuses Blackstone of failing to disclose that certain portfolio companies weren’t doing too well – namely FGIC and Freescale — which could trigger clawback provisions.

Let me first admit that I’ve only read coverage of the suit, but not yet the actual complaint itself. Nor have I spoken to any attorneys or Blackstone about it.

So all I can offer is the following gut reaction: Are you freakin’ kidding? The investor didn’t realize that at least some of Blackstone’s portfolio companies were struggling? That would mean he assumed every single Blackstone investment was doing bang-up business, which would make it the first-ever firm to have a 100% batting average. And, as a reminder, the IPO came pre-credit crunch.
This is just further proof that Blackstone shouldn’t have gone public. Not for its own sake, but to save ignorant public market investors from themselves.