- August 7, 2013
- Posted by: Vincent Sarullo
- Category: Direct Lending, Fund of Funds, Hedge Funds, Private Equity / Venture Capital, Raising Capital, Tax Liens
With the SEC lifting the ban on general solicitation and advertising under Rule 506 (http://www.sec.gov/rules/final/2013/33-9415.pdf) for private investment funds, Super Bowl ads may find hedge fund managers in the mix . Tower Fund Services’ view is that this is an incredible opportunity for the “hedge fund” industry to pull back the curtain and share with the public who and what it really is.
On July 10, 2013, the SEC voted 4 to 1 to lift the long standing ban on hedge fund and other investment fund managers from engaging in general solicitation and advertising activities. As much as this is being heralded as manna from heaven from the alternative investment community, it can create challenges and pitfalls for the unguided manager. The SEC has not provided guidance as to the dos and don’ts, so as those who venture out into this newly found sunlight of opportunity they will be under greater scrutiny by the regulators.
Tower Fund Services holds the opinion that this scrutiny will be in proportion to the magnitude of the marketing campaign run by the fund manager. Providing information about fund strategy and returns on websites or speaking on panels at industry events; less scrutiny. Sponsoring a blimp during the Super Bowl; a knock on the door at half time could upstage any wardrobe malfunction.
This ruling does not change the restriction as to who can invest in the private offering. Investors still must be accredited investors or qualified purchasers by definition. The manager must ascertain the qualifications of each investor to ensure compliance with this regulation.
This can be an opportunity dispel the opinion that hedge fund managers are the evil manipulators of Wall Street and show that this industry is made up of hard working Main Street people who love what they do: make money for others. The more the general public gets exposed to the industry and sees what everyone is all about, the better it will be for the industry and themselves. There is a great deal of knowledge that can be gained, knowledge that can be used to make informed decisions about their own investments.
In the upcoming months, while everyone is waiting to see who goes first, dedicate the time and resources to evaluate what is the best plan for the firm. There are many forms and outlets that the message can be delivered. There are many marketing firms out there to tap for help. Some are already strongly positioned in the hedge fund industry such as Hedge Fund PR, which has been closely following and planning for this day to come. Or, call Goodyear directly.