As a follow-up to our coverage on the amendments to Rule 506 of Regulation D and Rule 144A under the Securities Act of 1933  – the ban on hedge fund advertising has been lifted effective September 22, 2013.  This change is a result of Jumpstart Our Business Startups Act or the “JOBS Act”, as it is more popularly referred to.  The JOBS act has changed legislation of the Securities Act of 1933 which restricted companies seeking private investments from publically advertising.   As of Monday (9/23), portions of the JOBS act became effective, allowing non-registered investment companies and their respective firms to be allowed to reach potential new investors through television, radio and internet.   These private placements have long been limited to “accredited investors”; and those restrictions are still in place, so investors will have to meet certain net worth and earnings thresholds to qualify to invest in these private offerings.  Therefore, advertisement is not expected to be as “mainstream” as a product such as Pepsi, but will be more focused to avenues where they can reach these “accredited investors.”

In addition to publically advertising, firms of non-registered investment companies will also be able to conduct business more freely.  Web-sites will be more accessible and be able to display more information about fund performance.   Also, fund managers will now be able to freely talk about fund performance to reporters and on television.

This newly effective legislation significantly eases restrictions on advertising. It will be exciting to see if the changes translate into an in-flow of capital from previously untapped investors.


Irfan Raza

CPA, Supervisor


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