Monday, 28 July 2014
Last updated 2 hours ago
Jun 1 2012 | 2:13pm ET
The Investment Company Institute, a mutual fund lobby group, has asked the Securities and Exchange Commission to limit advertising by hedge funds and private equity funds.
In a letter to the commission, Paul Schott Stevens, the president and CEO of the ICI, told the watchdog that private fund advertising was “particularly susceptible to fraud” because such funds "often pursue investment strategies that are opaque" or "invest in securities that are difficult to value or relatively illiquid,” reports the Wall Street Journal.
The JOBS Act, recently signed into law by President Obama, lifts the 78-year-old ban on publicizing private securities offerings and the SEC has been given 90 days from the Act’s becoming law to write new rules governing such advertising.
Mitch Ackles, president of the Hedge Fund Association, a lobby group, sees the dispute as something of a David vs. Goliath scenario, given that mutual funds, as of the end of 2011, managed assets worth $23.8 trillion (according to the ICI) whereas hedge funds and funds of hedge funds managed $2.25 trillion (according to PerTrac).
Ackles says hedge funds have been restricted from providing “really meaningful information in the public domain” for almost 80 years.
“Today, you and I can walk by Tiffany’s, and see the jewels, even if we can’t afford them,” he told FINalternatives, pointing out that hedge fund investors must still be considered “accredited investors” to qualify. The ICI has also asked the SEC to raise the thresholds necessary to achieve “accredited investor” status.
Ackles says industry groups like his and the Managed Funds Association are “on the same page” on this issue and will be issuing a response to the ICI next week.
“Hedge funds are regulated, it is a fallacy to say that they are not,” says Ackles. “There is regulation for market participants. It is up to the regulators and the lawmakers to provide that guidance to the industry. However, I think it is very important to point out the JOBS Act is about creating jobs, the fact is, hedge funds do employ people, they do spend in the broader economy.”
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…