SEC eliminates ban on hedge funds advertising to general audience

WASHINGTON – For the first time, hedge funds will be allowed to advertise to the general public under a rule adopted Wednesday by federal regulators.

The Securities and Exchange Commission voted 4-1 to lift a decades-old ban on hedge funds marketing their investments to a wide audience.

Hedge funds are still allowed to sell securities only to an exclusive group of investors: those with a net worth of at least $1 million excluding their primary residence, or annual income of more than $200,000 in each of the two most recent years. About 7.8 per cent of U.S. households would qualify.

The change was mandated by legislation enacted last year. The law also makes it easier for small startup companies to raise capital without having to comply immediately with SEC reporting rules.

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