The hedge fund industry welcomed the news from Washington that the SEC had voted to lift the ban on general solicitations. While the jury is still out on how this will affect the industry and investors, it clear that many service providers – not just lawyers — are chomping at the bit to get their two cents in on the issue.
The ink was not even dry on the vote before “Client Alerts” appeared in the inboxes of both existing and would-be hedge fund professionals on what managers should do now that they can advertise.
Most of the “Alerts” were not from law firms, but from accountants, public relations firms, administrators, technology companies and even one firm that I can’t for the life of me figure out what it does.
Needless to say, all of these “Alerts” welcomed the lifting of the ban on advertising and provided insight into the changes in the law.
Really? Do these folks have a clue as to what they are talking about?
I don’t think so.
First, it’s bad form for these firms to offer advice on legal issues. In fact, it’s just plain wrong.
I did get two missives from law firms on the news. Both said basically the same thing: The ban is lifted and we are doing our research to understand what it means for the industry – stay tuned we’ll be back to you once we digest the hundreds of pages that make up the new law.
One lawyer I spoke to about the clutter in my inbox said that having an accounting firm or administrator comment on a change in the law is like having him commenting on a G.A.A.P rule change. It makes no sense.
So readers, beware of the “Alerts” that no doubt will be appearing in your inbox. And while it pains me to write this, to really understand what this means for you and for your fund: Call your fund counsel.