SEC says hedge funds can advertise

July 10, 2013 at 5:17 PM   |   0 comments

WASHINGTON, July 10 (UPI) -- The U.S. Securities and Exchange Commission said it approved a new rule allowing notoriously secretive hedge funds to advertise their services.

The new rule does not mean hedge funds will be racing to buy space on billboards, although it is intended, as part of the Jumpstart Our Business Startups Act, to make it easier for companies to raise funds, Forbes magazine reported Wednesday.

In turn, raising funds is intended to nudge businesses into hiring more employees.

But hedge funds are, to some degree, hunting grounds for billionaires. How many will want to shill for their firms is still unclear.

Hedge funds also compete with mutual funds for investor support and the Investment Company Institute, a trade group for mutual funds, said there are voluntary standards for how mutual funds calculate and advertise their performance records, Forbes said.

Those standardized guidelines do not apply to hedge funds, which has raised concern that mutual funds could be at a disadvantage in the public relations game.

"No such rules exist for private funds. They are not required to use any standardized methodologies for calculating performance, and they often invest in securities that are relatively illiquid and difficult to value," the institute said.

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