The head of the U.S. Securities and Exchange Commission is aiming to impose controversial new rules requiring hedge funds to disclose details about private stock deals before advertising them.
Reuters reported that SEC chair Mary Jo White explained to the Managed Funds Association in a speech on Friday that the plan, which would give the SEC more information about the private securities market, aims to offset concerns about the JOBS Act. The JOBS Act, which took effect in September, lifts the longstanding rule that bans hedge funds from soliciting or advertising to the general public.
The article added that various investor groups had been urging the agency to impose more customer protection rules prior to lifting the ban, claiming that inexperienced investors would potentially be taken advantage of by scam artists. Despite being allowed to publicly promote their funds under the JOBS Act, managers are still only able to accept capital from accredited investors.
Under the new proposal, hedge funds would have to file forms 15 days before they start advertising and provide more information about their firm, the offering and how the proceeds are used.