Are Hedge Funds Going Public?

According to Stephen Bornstein hedge funds may soon be competing with mutual funds for ad space on radio and TV.

The 30-year-old SEC regulation banning private companies - including hedge funds -- from engaging in "general solicitation" or "advertising" is apparently now in play.
Earlier this month, an SEC Advisory Committee recommended eliminating the federal ban on general solicitation in private securities offerings on the ground that they are directed solely at 'accredited investors.' Such investors are deemed to be able to fend for themselves and not need protection against public promotions. Since hedge funds can only be marketed to 'accredited investors,' they could take advantage of the relaxed rule, especially funds seeking more than 100 investors which can only be sold to substantial institutions and ultra-high-net-worth individuals.

Managed Funds Association, the hedge fund trade group, immediately threw its support behind the initiative arguing that revocation of the ban on general solicitation would increase the transparency of hedge funds in the investment marketplace for which regulators have been clamoring.

Because of the advertising ban, hedge fund managers currently have to tread a fine line between self-promotion and fund promotion in their dealings with the press. In media interviews, managers are constrained to limit their remarks to market commentary and general statements about themselves, their firms and their investment strategies. No mention can be made of their funds….

Wait…wait…there’s more at http://www.newyorkcityassetmanagementlawblog.com/2012/01/are-hedge-funds-going-public.shtml