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SEC weighs ending ban on hedge fund advertising

August 29, 2012|By Andrew Tangel
  • SEC Chairman Mary Schapiro talked about proposed new rules on hedge fund advertising at an SEC meeting.
SEC Chairman Mary Schapiro talked about proposed new rules on hedge fund… (Alex Wong / Getty Images…)

Hedge funds may soon advertise to investors such as you.

Securities regulations have barred hedge funds and other private investment vehicles from advertising and marketing to the general public for more than 30 years.

But the Jumpstart Our Business Startups Act, or JOBS Act, enacted this year requires the U.S. Securities and Exchange Commission to ease the ban.

Private offerings raised more than $1 trillion in 2011 -- about as much through offerings registered with the SEC, according to Mary Schapiro, the agency's chairman.

Under the new rules put forth by the SEC on Wednesday, those who take part in the private offerings would still need to be so-called accredited investors, which must meet certain income or net worth requirements.

"I believe that the proposed rules fulfill Congress’ clear directive that issuers be given the ability to communicate freely to attract the capital they need, while obligating them to take steps to ensure that this ability is not used to sell securities to those who are not qualified to participate in such offerings," Schapiro said at an SEC meeting Wednesday morning.

The SEC will accept comments for 30 days before considering whether to adopt the rules.


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