Mon, Sep 1, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Hedge Fund Association endorses JOBS Act: “an action whose time has come”

Friday, April 06, 2012
Opalesque Industry Update – The Hedge Fund Association, an international organization that represents hedge funds, service providers and investors, praised President Barak Obama for signing the Jumpstart Our Business Startups (JOBS) Act and provisions in it that will allow hedge funds to advertise responsibly to investors through normal channels. Emerging manager hedge funds are expected to benefit from the new law, according to the Hedge Fund Association (HFA).

“This is an action whose time has come,” said Mitch Ackles, president of the Hedge Fund Association. “Now that many hedge fund managers are required to register with the SEC, the strongest reason for the ban on hedge fund advertising has been removed. Second, information about hedge funds is ubiquitous because of the internet, websites and the media,” he added.

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 Securities and Exchange Commission under Rule 506 of Regulation D. 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.

It is expected that hedge funds will be allowed to advertise shortly after the Securities & Exchange Commission adopts final rules, which is expected to occur within 90 days of the signing of the JOBS Act. However, hedge funds will still be restricted to selling their securities to accredited investors such as individuals with a minimum $1 million net worth and qualified institutional investors (companies that manage a minimum $100 million in assets).

Lifting the advertising ban is expected to benefit registered, emerging manager hedge funds whose size has made it difficult to reach investors despite studies that show small hedge funds outperform large ones.

“While the JOBS Act represents a great step forward, there will likely remain some significant restrictions on what hedge funds are allowed to say. As a result, fund managers will still need to be sure their communications are compliant,” cautioned Ron Geffner, the Hedge Fund Association’s Vice President and a partner at the law firm Sadis & Goldberg.

Geffner said managers will likely be restricted from conducting a general solicitation unless they are registered as an investment adviser, either with the SEC or a state regulator.

“Still, managers can breathe easier knowing they can speak more freely,” Geffner added.

(Press release)

The Hedge Fund Association (www.thehfa.org) is an international not-for-profit organization made up of hedge funds, funds of funds, family offices, high net worth individuals and service providers. In the U.S., the HFA has chapters in the Northeast, Southeast, Midwest and on the West Coast. Internationally, the HFA has expanded to include chapters in Europe, Latin America and the Cayman Islands. HFA works on behalf of the entire hedge fund industry, including an estimated 9,523 hedge funds in the U.S. and abroad which collectively manage about $2.02 trillion in assets, as well as sophisticated investors and industry service providers.


See Opalesque's recent coverage on the JOBS Act:
04.04.2012 JOBS Act passes both houses, ends prohibition on general solicitation Source
23.03.2012 Opalesque Exclusive: U.S. JOBS Act may throw out SEC ban on solicitation Source

BG

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing
  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Study shows what resonates with investors: 'Unwavering', 'passionate' beats 'committed', 'dedicated' and more surprises[more]

    Komfie Manalo, Opalesque Asia: A new study by Pershing Square, a unit of BNY Mellon company, showed that an effective value proposition strengthens audience connections and fosters growth, yet many advisors have had little objective guidance in formulating such statements until now. In the

  2. Comment – Why you should avoid the hottest hedge fund hands, Swedroe attacks Hussman over risk management, relative value strategy[more]

    Why you should avoid the hottest hedge fund hands FromCNBC/Yahoo.com: Investors who don't have money with Pershing Square Capital Management are likely salivating at the hedge fund's industry-leading 26 percent return from January through July. But investing with Bill Ackman and other to

  3. Hedge fund assets decline in July - eVestment[more]

    Bailey McCann, Opalesque New York: Total assets in hedge funds declined in July and dropped 0.49%, marking the industry's second monthly asset decline in 2014, according to the latest asset flows data from eVestment. Despite the asset decline, total industry AUM remained above the $3 trillion

  4. AIMA makes 'the case for hedge funds'[more]

    Bailey McCann, Opalesque New York: The Alternative Investment Management Association (AIMA), the global hedge fund industry body,

  5. Managed futures' global diversification is important in next phase of economic recovery[more]

    Komfie Manalo, Opalesque Asia: The global diversification provided by managed futures may prove to be extremely valuable as the markets enter the next phase of the economic recovery, said Campbell & Company, a pioneer in absolute return invest