Recall that the JOBS Act ended a ban on the solicitation and advertising of certain non-registered securities, which has some hedge funds giddy with anticipation.
Now companies will be permitted to use general advertising in support of securities offerings according to Rule 506 of Regulation D of the Securities Act and Rule 144A of the Securities Act. As with other aspects of the JOBS Act (notably the change to the quiet period on new stock offerings), it's unclear how quickly the industry will move to take advantage of their new freedom to advertise.
The big asset managers have been rather mum on the issue, as all are pondering what to do. But Bloomberg notes that, "The law may give the biggest advantage to firms with trillions of dollars in assets and create a divide between asset managers that offer hedge funds, private equity and other alternatives and those that don't."
The biggest funds companies tend to have their marketing down solid, and it's unclear how general advertising would meaningfully enhance those efforts. Recall that alternative asset managers have not been relieved of any accreditation and "qualified purchaser" burdens.
So they can't accept investments from just anyone. Smaller hedge fund firms, however, may sense a greater opportunity to enhance their brand in traditional media. All in all, it's still a bit early to say that the law will have a profound impact on hedge funds and private equity funds marketing.
- here's the article