HFA Wants Clear Investor Accreditation Rules

Sep 13 2012 | 7:46am ET

The Hedge Fund Association wants the Securities and Exchange Commission to spell out its rules for investor verification for funds planning to advertise once an 80-year-old ban on the practice is lifted.

The recently passed Jump Start Our Business Start-ups Act proposed lifting the ban on hedge fund advertising while continuing to restrict investment to accredited investors.

The HFA welcomes the move to lift the ban but worries that regulations that are either too vague—the SEC has said managers must take ‘reasonable steps’ to ensure investors qualify— or too detailed could derail the JOBS Act’s original goal of increasing employment by making it simpler for private companies to raise money from investors.

“At the same time as lack of legal clarity can cripple businesses with uncertainty, clear laws which demand too much of investors and issuers can dampen the interest in allocating capital to private companies while greatly adding to fund managers’ operating expenses,” said HFA President Mitch Ackles. “In drafting final regulations, we ask the SEC to keep this in mind and to remember the original intent behind JOBS Act—to invigorate the economy.”
 
In a letter to the SEC, the HFA suggested accrediting would “ideally” involve an investor signing a subscription agreement affirming that he or she is an accredited investor and providing “a detailed description of the reason why the investor made that claim.”

The group also asked the SEC to coordinate with another regulatory body, the Commodity Futures Trading Commission, in drafting its investor accreditation rules.


In Depth

Whisky Business: The Ultimate Liquid Alternative Investment

Sep 15 2014 | 7:02am ET

David Robertson knows his single-malt whisky—he was the Master Distiller at the...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

Volkered: How Financial Sector Reforms are Creating Opportunities for Hedge Funds

Sep 16 2014 | 11:28am ET

New regulations have dramatically curtailed proprietary trading activity in investment...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

The London Whale saga is a twist on the typical rogue trader story as the rogue trader recognized the error of his ways and was prepared to take his medicine but was instructed by superiors to “defe...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.