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 state lotteries, but I'd like to instead focus on his discussion of how the JOBS Act would allow private equity and hedge funds to advertise their wares. Mainly because that is where he and I do have some significant disagreement.
For the first time, private equity and hedge funds will be able to advertise — and thereby separate inexpert individuals from their savings. Putting money in these alternatives is yet another type of investing that Americans shouldn't try at home. Until now, only a small percentage of Americans who qualified to invest this way (the law requires they have an income of $200,000 per year for an individual or a net worth of $1 million) did so. The possibility that advertising will lure more people to participate does no one any favors. Besides, these days, the most successful private equity and hedge funds can already raise all the capital they can efficiently manage without advertising.
So I'll wager that most of this new advertising will come from firms that sophisticated institutional investors wouldn't consider investing in. No wonder that the Securities and Exchange Commission, whose former chairwoman Mary Schapiro opposed the legislation, has been taking its time writing the regulations to implement these provisions.
Two quick points:
When Rattner writes that Mary Schapiro's SEC has been "taking its time writing the regulations to implement these provisions," what he really means is that it has been missing deadlines. And it continues to be ridiculous. Not only because the SEC isn't entitled to reverse the will of both Congress and the President -- the JOBS Act language is quite clear -- but also because this rule does nothing to allow those who currently cannot invest in private equity and hedge funds to do so. Instead, it simply clears up the lines of communications for those who already are permitted in the club. It also would allow fund managers to discuss such efforts with journalists, which could lead to more critical reporting of such efforts.
Remember, the current rules are so restrictive that private equity managers can't even discuss fundraising in front of a paying conference audience of institutional investors. Last week at the SuperReturn International conference in Berlin, PE manager after PE manager gave bland speeches that studiously avoided what many attendees wanted to hear about. Once finished, they then scurried off into an adjoining office building to have such discussions with attendees on a one-on-one basis. Private equity is supposed to be an inefficient market, but not like this...
Sign up for Dan's daily email newsletter on deals and deal-makers: GetTermSheet.com
Steve Rattner gets by with a lot of help from his friends.
FORTUNE -- Well, it's official: Steve Rattner's reputation has been rehabilitated, just two years after settling with federal and state authorities over allegedly participating in a kickback scheme to get public pension fund investments for his private equity firm.
From Andrew Ross Sorkin at The New York Times:
As Mr. Rattner sat across from me in Midtown Manhattan two weeks ago, MOREDan Primack - Feb 19, 2013 3:54 PM ET
Full disclosure: NYT op-ed on private equity lacks context.
FORTUNE -- The New York Times today runs an op-ed by Steven Rattner, who made political waves last week by chastising an Obama campaign ad that attacked Mitt Romney's record at Bain Capital. It's titled "Tall Tales About Private Equity," and does a pretty good job explaining private equity's real purpose (making money) and how Romney has cherry-picked his own record for MOREDan Primack - May 23, 2012 11:01 AM ET
Stop the presses: A private equity exec supports private equity!
Memo to political journalists: Stop being so surprised that Steve Rattner defended Mitt Romney and Bain Capital from President Obama's attacks. Seriously. You're looking ridiculous.
Here's what I'm talking about: Last Monday, the Obama campaign launched its opening salvo on Mitt Romney's business background with Bain Capital. On Tuesday, Rattner was a guest on MSNBC's Morning Joe and, when asked, said he felt MOREDan Primack - May 21, 2012 3:03 PM ET
After more than a year of wrangling, obfuscation and name-calling, Steven Rattner has effectively 'fessed up to having done wrong.
The former car czar and private equity boss today agreed to pay $10 million in restitution to the State of New York, for his role in the state's public pension kickback scandal. He also has agreed to refrain from "appearing in any capacity" before any New York pension fund for the next five years.
This MOREDan Primack - Dec 30, 2010 1:31 PM ET
Hank Morris, the private equity "finder" at the heart of New York's public pension kickback scandal, today plead guilty to a felony violation of The Martin Act.
As part of the deal, Morris will repay $19 million, accept a lifetime ban from the securities industry and pledge to never again solicit investments from any government entity within New York. He also faces up to four years in prison, with a sentence MOREDan Primack - Nov 22, 2010 1:11 PM ET
That's the headline in this morning's NY Post, although the story isn't nearly so dire.
As the paper reports, private equity firm Quadrangle Group has indefinitely postponed any new fundraising (it's long been out of dry powder for new investments), and any future fund is unlikely to follow past structures (perhaps an evergreen effort?). It also is planning to hire some new folks, with certain existing staffers choosing to move MOREDan Primack - Nov 22, 2010 10:47 AM ET
Here's a sign that Mike Bloomberg isn't seriously considering a run for president: His stubborn refusal to cut Steve Rattner loose, or even acknowledge that his friend is involved in a serious public corruption scandal.
For example, here's what he said back in June:
"I don't think [Rattner] did anything wrong… I happen to think the charge against him is ridiculous... I've always stood up for anybody that works with me who MOREDan Primack - Nov 18, 2010 4:44 PM ET
Steve Rattner has not yet isssued a legal response to the charges brought against him by Andrew Cuomo, but he has filed a Petition in Aid of Arbitration. That would be in reference to a private arbitration with Rattner's former Quadrangle Group partners, which now is being thrust into the public sphere.
A quick read suggests that Rattner is arguing his innocence against Cuomo's allegations, kind of like he did via MOREDan Primack - Nov 18, 2010 4:03 PM ET
Steve Rattner has responded to today's developments in the New York pay-to-play scandal, including his settlement with the SEC and charges brought against him by the NY Attorney General Andrew Cuomo. Here it is (via Dealbook):
While settling with the S.E.C. begins the process of putting this matter behind me, I will not be bullied simply because the attorney general's office prefers political considerations instead of a reasoned assessment of the MOREDan Primack - Nov 18, 2010 12:35 PM ET
|Military retirees: You betrayed us, Congress|
|Instagram launches direct messaging|
|I work 4 jobs and I'm still struggling|
|Ford set for most aggressive expansion in 50 years|
|Stocks sink as disappointing December continues|