A 78 year long ban on hedge fund advertising has been lifted. (And I didn’t even know that hedge funds had been around that long.) Actually this was a ban on private placement advertising of which hedge funds and other private investments happen to fall under. This means that hedge funds can now use general advertising. But they will still only be able to accept accredited investors.
Here’s what FINalternatives had to say:
“[T]his is really going to benefit them, I believe, more than it will benefit the multi-billion [dollar] funds. They have people waiting to invest, so you’re unlikely to see those Bridgewaters and so forth out there with a billboard in Times Square. But you will probably see additional advertising through online channels…You’ll probably see people being a little more comfortable talking to the media, and I believe that those are significant changes for an industry that has had to be so hyper-careful about what they say and who they say it to.”
Ackles told FINalternatives the new regulations could improve public perception of the hedge fund industry:
“[P]eople often believe the hedge fund industry to be mysterious and that’s because they don’t have access to all the information that these qualified investors have had access to and now that some of those restrictions—not all of them—are lifted, or will be lifted within 90 days of the president actually signing [the JOBS Act], that should allow the industry to engage more with one of its key constituencies—which is Main Street.”
Excuse me but when has Main Street been one of the hedge fund industry’s main constituencies? To invest in a hedge fund you typically need one million dollars in liquid assets. Since when does Main Street have this much money under the mattress. In case they didn’t notice the average 401K balance of workers approaching retirement is under $100,000. I guess they are talking about a different Main Street.
My take is that the archaic accredited investor limitations should be removed and everyone should be allowed to invest in whatever they want. It should be left up to the investor to determine what is suitable and what is a good investment. After all if the average investor isn’t protected from investing in the fiasco that is the TVIX, which actually fell in value when it should have risen in value, shouldn’t they be allowed to invest in something like the Medallion Fund which seems to mint money?
And hey, I as the proprietor of a hedge fund blog, I kind of like the abolition of this archaic rule. Now I can sell advertising space to more hedge funds. What’s not to like. Will taking advertising dollars influence my opinions? Oh no, I’m totally impartial and unbiased. :-7