SEC Gives OK for Hedge Funds to Advertise

Along with permitting firms to advertise private offers, the SEC also passed a proposal aimed at protecting investors by requiring issuing firms to notify the agency 15 days in advance of commencing an offering that will be widely advertised. Failure to do so will result in a one-year suspension of the right to make such advertised offerings.

The SEC did not require that issuing companies limit their audience to accredited investors, currently defined as people with net worth exceeding $1 million excluding the value of their primary residence or those who have earned $200,000 in annual income for the past 2 years.

The agency did bar convicted felons and others convicted of securities fraud from participating in publicized private offerings.

The proposed rules will be published for public comment in the Federal Register. The ban on advertising will end 60 days later.