Pirate Capital,LLC is a $1.8 billion hedge fund that has hit a rough patch lately employing an "activist" strategy of buying stocks and attempting to prod management of target companies to take steps to boost their stock prices.

Some of Pirate's investments are down sharply this year; its overall return is roughly 3%, according to hedge-fund industry advisers, less than an average of about 7% for activist funds in general. The Securities and Exchange Commission is investigating whether Pirate ran afoul of securities law by failing to timely disclose it had sold stocks, a person close to the situation says. Pirate says the regulatory matter was a misunderstanding that it has sought to rectify.