The firms most likely to benefit first from new rules that would allow hedge funds to conduct wide advertising campaigns aren’t hedge funds.
BlackRock Inc. (BLK), the world’s largest money manager, offers alternative investments and supports the change. So does JPMorgan Chase & Co. (JPM), the biggest U.S. bank by assets, said two people familiar with its position, who asked not to be identified because the matter is private. The companies have the marketing breadth to seize the opportunity, while hedge funds and private-equity firms with smaller promotional teams may be hindered as investors turn to alternatives for higher returns.
Bloomberg reports that The Jumpstart Our Business Startups Act, signed into law by President Barack Obama in April, ended a ban on the advertising of non-registered securities as part of an effort to expand funding options for startup companies. 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, such as traditional mutual-fund companies.
“The JOBS Act is something where the advantage is for hedge funds, but they don’t have the skills for it and the traditional managers that have alternatives have the capabilities to take advantage of it,” Benjamin Phillips, a partner at consulting firm Casey, Quirk & Associates in Darien,Connecticut, said in a telephone interview.
The U.S. Securities and Exchange Commission is responsible for writing the rules to implement the law and commissioners voted 4-1 on August 29th to invite public comment on their proposal. Comments are due October 5th.
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