BayStar invests in publicly traded companies with a mechanism called a PIPE--private investment in public equity. While Microsoft has used PIPEs in the past, a BayStar representative said Microsoft apparently hasn't ever participated in a BayStar PIPE and certainly didn't participate in the SCO investment.
BayStar Capital entered the open-source spotlight last week with its , which is embroiled in legal wrangling over Linux and Unix with IBM and Red Hat. What the companies didn't say so loudly, though, is that $30 million of BayStar's investment in SCO was from the Royal Bank of Canada, according to a Thursday regulatory filing with the U.S. Securities and Exchange Commission. BayStar itself invested the remaining $20 million.