The SEC is expected to release rules on the Job Act, which allows for hedge funds to advertise their services but still limits their clientele to accredited investors in July.
Mitch Ackels, president of the Hedge Fund Association, and Richard Heller, its chairman, urged the SEC on Wednesday to clarify rules on vetting clients.
Ackles said by phone Wednesday his group wants a uniform and measured approach to the regulations and has grown concerned by a push by mutual funds on the matter that could interfere with the spirit of the law, which was to aid job creation and capital formation in the industry while providing more information to investors.
For years, hedge funds have relied on word of mouth and have not been able to recruit clients. Even when a client comes in, Ackles said, managers have to review the potential client's financial situation to make sure they meet the income threshold. An accredited investor must have more than $1 million in assets, excluding homes, to invest in a fund. Even after the initial vetting process, Ackles said most funds have a three-to-six month waiting period before they will take a clients money.
He said with advertising, the industry hopes to have an established and uniform vetting process to follow, but also wants to make sure it's not fair.
