If you can trust HuffPo, Mad Men, the wildly popular AMC TV show about the fictional
1960s advertising agency Sterling Cooper Draper Pryce, is set in a haze of
cigarette smoke, alcohol and chronically inappropriate behavior. Hedge funds,
dating back to a similar era, have remained equally hazy to most Americans, as
well as often being equally off-center in their behavior. Today, as a result of
the JOBS Act (Jump-Start Our Business Start-ups), hedge funds are now allowed
to advertise their products through the mass market. And, to further confuse
consumers, hedge funds come in all flavors, all shapes and sizes. Speaking of
them as a single asset class is akin to going to the zoo and telling the
zookeeper, "I'm here to see the animal."
While the JOBS Act may be a "boom" for the
media/marketing industry, it may also end up being a "bust" for
consumers. This deregulation of hedge fund advertising, an unintentional
consequence of the JOBS Act, will now expose consumers to the largely confusing
world of hedge funds. Hedge funds were formerly restricted to
marketing/communications with only those with whom they had had a previous
relationship. This resulted in marketing to intermediaries -- expected to be
sophisticated -- instead of the general public. While still restricted to
accepting investors who are not "accredited," investments classified
as hedge funds are now able to market to the public….
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