JOBS Act
Beware of that hedge fund in the window
May 23, 2013: 3:29 PM ET
When hedge fund managers advertise, performance dips.
FORTUNE -- Hedge funds soon will be allowed to advertise their wares to potential clients, thanks to a provision in last year's JOBS Act (which had no direct relation to actual jobs). As will private equity funds, venture capital funds and other alternative investment vehicles that heretofore were prohibited from general solicitation.
Former SEC Commissioner Mary Shapiro opposed the change, so she basically sat on it (apparently believing her personal opinion trumped the directive of federal legislation). New SEC Commissioner Mary Jo White has suggested that she'll move this and other JOBS Act provisions along shortly.
So in a few months expect the pages of your favorite financial rag and website to contain advertisements for investment opportunities that you probably can't afford (since you'll still need to be an "accredited investor" to actually participate). For the 1%, however, a word of warning: Future performance is likely to be worse than past performance.
That's the finding of a new academic paper that examined the results of mutual fund advertising by companies also manage hedge funds. These advertisements don't specifically mention the hedge funds -- that still would be illegal under current law -- but they do compel wealthy individuals to ring the parent organization, which then does a classic up-sell.
The researchers learned that such advertisements generally follow a lull of hedge fund inflows, and result in a monthly bump of 0.5%. Not too shabby, considering that they were technically advertising for something else.
At the same time, however, the researchers found that monthly hedge fund performance post-advertisement fell by 0.1%. There isn't a specific explanation for the post-advertising performance dip, except perhaps that performance is negatively correlated to inflows (something that venture capital and private equity firms often talk about).
To be sure, a 0.1% decrease is not the end of an investor's world -- particularly if we're talking about a fund that had strong performance to begin with. But it also means that when these opportunities become more widespread, investors should consider that they'll likely be paying full price for items that ultimately will be discounted.
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Rattner vs. private equity solicitation
The part of Steve Rattner's JOBS act column that hasn't gotten enough attention.
FORTUNE -- Steve Rattner has been taking some heat for a recent New York Times column that was deeply critical of the JOBS Act. I actually applaud his willingness to take on this sacred cow, although my own take on the legislation is more ambivalent.
Most of the attention has been focused on Rattner's choice to equate crowd-funding with MORE
Dan Primack - Mar 5, 2013 5:06 PM ET -
Interested in crowdfunding? 5 priceless pieces of advice
Startup crowdfunding is due to change drastically this year. Here's advice from Ronny Conway, Ben Horowitz, Kevin Rose, and others.
By Kurt Wagner, reporter
FORTUNE -- Investing successfully in startups takes more than a pocketful of cash. That's the message venture capitalists and securities regulators hope to transmit to those interested in equity-based crowdfunding, a new form of investing currently awaiting regulatory approval. Ordinary investors will soon have the opportunity to invest MORE
Feb 25, 2013 10:30 AM ETPosted in: Andreessen Horowitz, Ben Horowitz, crowdfunding, investing, JOBS Act, Marc Andreessen, startups -
SEC's Schapiro cements a different type of legacy
Mary Schapiro's job not well done.
FORTUNE -- We may now know why the SEC has been taking so long to finalize private placement marketing rules, as it was directed to do by this past spring's JOBS Act. From Reuters:
"Outgoing U.S. Securities and Exchange Commission Chairman Mary Schapiro delayed immediately implementing a rule to lift a ban on broader-based advertising for private placements in part because she feared it would tarnish MORE
Dan Primack - Dec 3, 2012 1:02 PM ET -
Pre-Marketing: Did SEC's Schapiro delay JOBS Act?
* Boom: SEC's Schapiro delayed JOBS Act to protect legacy
* Chris Dixon: Product lens vs. finance lens for startups
* Carlyle's Jason Thomas: Is the fiscal cliff dive already baked in?
* Morning Call: U.S. futures point higher, European shares climb and the Nikkei rises.
* Rob Go: Super angels, two years later
* No Renesas for you: KKR can't penetrate Japan's deal club
* Julie Bort: Meg Whitman's blame game may be backfiring
* Get Term Sheet: MORE
Dan Primack - Dec 3, 2012 7:03 AM ETPosted in: JOBS Act, Pre-marketing -
Dude, where's my JOBS Act?
Parts of the JOBS Act remain in limbo.
FORTUNE -- Apparently the SEC thinks deadlines are for chumps.
When President Obama signed the JOBS Act back in March, several of the provisions went into immediate effect. For example, the so-called "500 shareholder" rule was converted into a "2,000 shareholder" rule, and a group of smaller private companies was exempted from certain reporting requirements when filing to go public.
But many of the provisions MORE
Dan Primack - Jun 29, 2012 10:42 AM ET -
For emerging companies, a dual track dilemma
How to make some noise while staying quiet.
FORTUNE -- It's been two months since President Obama signed the JOBS Act into law, and dozens of "emerging companies" already have filed confidential IPO registration papers with the SEC. Some even have emerged from the private vetting process and filed "public" papers (e.g., LegalZoom).
From what I hear, the process has been going smoothly. The SEC has created a secure email system for MORE
Dan Primack - Jun 11, 2012 9:07 AM ET -
Get a piece of my hedge fund!
The JOBS Act will lift a ban on advertising by hedge fund and private equity firms, but Wall Street may come to regret it.
By Cyrus Sanati, contributor
FORTUNE -- Private equity doesn't have to be so private anymore. Buried deep in the recently passed JOBS Act bill is a provision that lifts the old Depression-era ban on advertising unregistered private placements to the general public. That means it will be possible MORE
Apr 4, 2012 10:22 AM ET -
Jobs Act: A great start, but more is needed
New legislation giving small businesses access to capital will help, but it won't solve the jobs crisis. America's corporate leaders need to join together to fuel the growth of entrepreneurial innovation.
By Duncan L. Niederauer, CEO of NYSE Euronext
FORTUNE -- The struggling U.S. economy received a welcome boost when the Jobs Act survived our bitterly divided Congress -- it now awaits President Barack Obama's signature. The passage of this new law MORE
Apr 3, 2012 10:48 AM ET -
Unintended contradictions of JOBS Act
Let me set the scene: It's 70 degrees outside on a Friday afternoon. I'm all set to give my keyboard a rest, when the following tweet pops up on my screen from noted venture capitalist Josh Kopelman:
I click the link, and learn that Josh is arguing (again) in defense of the JOBS Act that passed the U.S. Senate yesterday. His basic argument is that lubricating the IPO pipeline -- one MORE
Dan Primack - Mar 23, 2012 3:48 PM ET
