HedgeFundsX

By Jessie Hamilton

The Managed Funds Association is urging U.S. regulators to remove restrictions on solicitation and advertising in private offerings to make it easier for hedge funds to raise money and promote their products.

The Securities and Exchange Commission should amend its rules to allow private funds to “engage in communication and offering activity while remaining in compliance,” Richard H. Baker, the Washington-based lobby group’s president and chief executive officer, said in a letter requesting the rule change. An SEC advisory group on small and emerging companies voted for a similar recommendation on Jan. 6.

The change would let hedge funds avoid the SEC’s registration process while openly seeking money from so-called accredited investors, those deemed sophisticated enough to understand riskier offerings. Changes in securities markets and regulations have rendered the 30-year-old restrictions unnecessary, Baker wrote in the letter dated yesterday.

“We believe eliminating the ban would reduce the cost of capital for private funds and lead to greater efficiency in private offerings,” Baker wrote.

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