Hedge fund managers now no longer have to hide behind their websites because they are free to advertise openly to investors who meet their investment requirements courtesy of President Obama's JOBS Act.

That's because two weeks ago, the Securities and Exchange Commission adopted a new rule to implement a JOBS Act requirement to lift the ban on general solicitation or general advertising for certain private securities offerings, including hedge funds.

Yes, hedge funds. Those once secretive vehicles available only to accredited individuals with $1 million or more in net assets are now free to advertise publicly to the same crowd provided that they meet the accredited investor requirements, of course.

Now, traditional mutual funds and alternative mutual funds alike can look forward to sharing the airwaves and billboards with the likes of Bill Ackman of activist hedge fund Pershing Square Capital Management or Steve Cohen of SAC Capital.

In a statement, newly-minted SEC Chair Mary Jo White said: "As we fulfill our mission to facilitate capital formation and maintain fair and efficient markets, the Commission must always focus on strong investor protections. We want this new market and the private markets in general to thrive in a safe and efficient manner, and these rules we adopt and propose are designed to facilitate that objective."

So what's the problem? Plenty, according to Investment Company Institute's President and CEO Paul Schott Stevens. In a previous statement, Stevens said that while sales may be limited to accredited investors, the ads are viewed by accredited and non-accredited investors alike and "a misleading advertisement for a private fund thus has the potential to harm not only the accredited investors that ultimately might invest in the fund, but also to cause confusion among fund investors of all types, and damage the reputation of all funds in the marketplace."

Moreover, Stevens argued that the standards for accredited status are "shockingly low" because the income and net worth tests were set 30 years ago, and have "substantially eroded over time."

"As a result, many of the accredited investors targeted by these ads lack the sophistication necessary to fend for themselves and deserve the SEC's protection," he said.



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