Gotham Partners is moving to liquidate one of its big stock holdings, as securities regulators step up an inquiry into the hedge fund's business practices.

The hedge fund, which is in the process of shutting down its major investment funds, filed a notice Wednesday that it intends to sell its 31% stake in Imperial Parking ( IPK), a Canadian-based operator of parking lots in Canada and the U.S.

Gotham effectively controls Imperial, a company with more than $120 million in annual revenue and about $2 million in net income. William Ackman, one of the hedge fund's co-founders, has been chairman of Imperial for the past two years.

Gotham, which has an agreement with Imperial not to sell its shares until May 23, disclosed its intention in a filing Wednesday with the Securities and Exchange Commission. The delay is intended to give Imperial a chance to explore "strategic alternatives."

Imperial, a thinly traded stock with a market capitalization of $41 million, rose a nickel on Wednesday to close at $22.70.

The Gotham stock liquidation comes at a time that New York Attorney General Eliot Spitzer is looking into the hedge fund's research and trading practices. The planned stock sale also reveals another layer in what is emerging as a tangled web of intersecting business deals involving Gotham, Ackman and several independent real-estate companies.

In particular, Spitzer is investigating allegations that Gotham and other hedge funds conspired to drive down the price of some stocks by issuing negative research reports on those companies. Spitzer launched the informal investigation after officials with bond insurer MBIA ( MBI) complained last week about a highly critical research report Gotham issued about the company in early December.

At the time Gotham published the report on MBIA, the hedge fund had taken a short position in MBIA shares -- a market bet that a company's stock will in fall.

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