July 10, 2013 by Tamara Piety
Advertising Age has a story reporting on this issue of a portion of the JOBS Act (Jumpstart Our Business Startups) that removes the prohibition on advertising private placement. The title of the article captures it pretty well: “80-Year Ban on Hedge Fund Advertising Set to Be Lifted.” As I previously reported in 1-800-Private Placements, the AdAge article suggests that because the investor restrictions are still in place that there won’t be any rush to do print or TV ads. Supposedly what this will do is allow “hedge fund managers to communicate more freely at conferences and to offer more information about fund performance on their websites.”
Oh goody, because hedge fund managers’ communications have been so uniformly helpful to the economy in the past back when they were just talking to sophisticated investors and investment bankers.
“You wouldn’t expect the type of person who is typically sought as an investor to be investing off of an ad in a newspaper or magazine,” says a quoted source. No you wouldn’t would you…would you?
I am afraid it seems all too likely that there were some folks sitting around saying things to each other like – “I bet we are leaving some money on the table by not being able to pitch to those Mom and Pop investors out there” and why DO think they can get people to invest through a magazine ad. After all, they convince people to buy prescription medication, to smoke cigarettes, warranties, lottery tickets and miracle fat burning pills, so why not investments which will “put you in the big leagues” and offer “the potential to triple your investment!”
What could possibly go wrong?