Hedge Funds Industry Wants Clearer Rules on Advertising
Tweet
Share
E-mail
The Hedge Fund Association asked the SEC for clearer rules regarding solicitation of potential investors. The comments come as the SEC is set to change its rules to allow hedge funds to communication directly with potential investors.
Hedge funds have been banned from soliciting or advertising their private offerings to the general public in exchange for being exempt from having to register their interests or shares with the SEC. The lack of a clear definition of a solicitation has created confusion about what hedge fund managers can disclose in their marketing materials, at conferences or in the media.
The group said liberalized advertising and solicitations rules contained in the new Jumpstart Our Business Startups (JOBS) Act would help hedge funds raise assets and encourage emerging managers to continue to enter the industry.
They want clearer rules to verify that potential investors are indeed accredited investors.
Copy of the comment letter from Mitch Ackles, President of the Hedge Fund Association (HFA).
"The HFA believes that amending the rules that relate to capital formation is fundamental to the continued growth of the hedge fund industry and that allowing general solicitations to further that outcome will encourage emerging managers to continue to enter the industry. Further, providing rules to strengthen a manager's decision to accept a subscriber's investment by following the rules to be drafted by the SEC that will, for the first time, provide a road map for Managers to rely upon will, we believe, add further levels of compliance that the Dodd-Frank Act initiated. While Managers have had subscription agreements in place (and internal policies to provide checks and balances for the manager), having rules
in place to verify that potential investors are indeed accredited will add further stability to the industry.
The HFA recognizes that the SEC may be concerned that opening the door to general solicitation may, to some degree, open the door to people who wish to perpetrate fraud in connection with false or misleading statements to induce investors to invest in hedge funds. We would remind the SEC that the JOBS Act in
no way limits Section 10b-5 promulgated under Section 10 of the Exchange Act, nor does it limit Section 17(a)0 of the Securities Act. All of the state securities or "Blue Sky" rules relating to fraud remain unaffected by the JOBS Act and hedge fund managers continue to be subject to the anti-fraud provisions of the Investment Advisers Act. Lastly, we note and support the changes to Section 3(c)(7) and would hope that the SEC will amend the language of the Investment Company Act as being available only to offerings not involving a public offering to be consistent with the JOBS Act."
Hedge funds have been banned from soliciting or advertising their private offerings to the general public in exchange for being exempt from having to register their interests or shares with the SEC. The lack of a clear definition of a solicitation has created confusion about what hedge fund managers can disclose in their marketing materials, at conferences or in the media.
The group said liberalized advertising and solicitations rules contained in the new Jumpstart Our Business Startups (JOBS) Act would help hedge funds raise assets and encourage emerging managers to continue to enter the industry.
They want clearer rules to verify that potential investors are indeed accredited investors.
Copy of the comment letter from Mitch Ackles, President of the Hedge Fund Association (HFA).
"The HFA believes that amending the rules that relate to capital formation is fundamental to the continued growth of the hedge fund industry and that allowing general solicitations to further that outcome will encourage emerging managers to continue to enter the industry. Further, providing rules to strengthen a manager's decision to accept a subscriber's investment by following the rules to be drafted by the SEC that will, for the first time, provide a road map for Managers to rely upon will, we believe, add further levels of compliance that the Dodd-Frank Act initiated. While Managers have had subscription agreements in place (and internal policies to provide checks and balances for the manager), having rules
in place to verify that potential investors are indeed accredited will add further stability to the industry.
The HFA recognizes that the SEC may be concerned that opening the door to general solicitation may, to some degree, open the door to people who wish to perpetrate fraud in connection with false or misleading statements to induce investors to invest in hedge funds. We would remind the SEC that the JOBS Act in
no way limits Section 10b-5 promulgated under Section 10 of the Exchange Act, nor does it limit Section 17(a)0 of the Securities Act. All of the state securities or "Blue Sky" rules relating to fraud remain unaffected by the JOBS Act and hedge fund managers continue to be subject to the anti-fraud provisions of the Investment Advisers Act. Lastly, we note and support the changes to Section 3(c)(7) and would hope that the SEC will amend the language of the Investment Company Act as being available only to offerings not involving a public offering to be consistent with the JOBS Act."
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Stewards acquires Pompano Beach multifamily property for $90M
- Lakewood-Amedex doses first patient in diabetic foot ulcer trial
- Trident Digital Tech regains Nasdaq compliance on market value
Create E-mail Alert Related Categories
Hedge FundsRelated Entities
Hedge FundsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
