The Securities and Exchange Commission’s vote last week to propose allowing hedge fund advertising opened a 30-day comment period, and the regulator is likely to get an earful.
Eliminating the 80-year-old rule against general solicitations for private offerings was mandated by April’s JOBS Act, backed by both President Barack Obama and Republicans in Congress. But that rare piece of policy concert doesn’t impress critics of the measure, who fault the SEC for not imposing restrictions on hedge fund advertising or putting into place strict verification procedures to ensure would-be investors are accredited.
Sen. Carl Levin (D-Mich.) complained that the rule as written—it includes no restrictions on solicitations and does not specify any rules regarding verification—”began undermining significant investor protections.”
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Hedge funds may go from soliciting individual investors behind closed doors to conducting wide advertising campaigns under a rule set for proposal today by the U.S. Securities and Exchange Commission.
As reported by Jesse Hamilton and Margaret Collins of Bloomberg News, SEC commissioners will decide whether to invite public comment on a proposal for how to end decades of restrictions on how private funds and startups can pursue investors. The proposal is driven by a law that repealed a ban on pitching such investments to all but a select few investors, such as those accustomed to pumping cash into hedge funds.
The Jumpstart Our Business Startups Act, signed into law by President Barack Obama in April ended the ban as part of a wider effort to ease funding options for fledgling companies. The shift drew criticism from investor-protection groups and the mutual-fund industry, including the Washington-based Investment Company Institute, which have said that lifting the ban without restrictions may expose investors to misleading advertisements by some private funds.
Posted in Economy, emerging market, Equity Markets, European economy, Hedge Funds, Investment Banking, Private Equity, Value Investing, Venture Capital
Tagged Economy, equity, financial markets, Financial Srvices, Global Economy, Hedge Fund conference, Hedge Funds, investment, investment bank, investment portfolio, marketing, Modern Finance Report, New York, New York Fed, President Barack Obama, President Obama, proposal, SEC, Securities and Exchange Commission