Patrick Harden

Cure for the Bad-CEO Blues: Sue Your Shareholders

FACT: Allied Capital is a Unit Investment Trust eligible under Regulation M of the Internal Revenue Service to pass capital gains, dividends, and interest earned on fund investments directly to its shareholders to be taxed at the personal level. To qualify as a regulated investment company, the fund must meet such requirements as 90% minimum distribution of interest and dividends received on investments less expenses and 90% distribution of capital gain net income.

FACT: Allied, as a regulated investment companies must have a debt-to-equity ratio of no greater than 1:1. As a result, Allied must consistently do secondary offerings in order to increase the amount it is able to borrow to grow its portfolio.

FACT: The dividends Allied have paid have been either ordinary taxable income or capital gains -- not a return of capital.