A hedge fund firm has been fined for not including that hedge fund can be risky in its advertising, Reuters reports.

This is the first firm in the $600 billion fast-growing hedge fund industry, once reserved for the super rich, to be punished by National Association of Security Dealers for reckless advertising.

Altegris Investment Inc., a La Jolla, Calif.-based hedge fund marketing firm, will pay $175,000 because its brochures about specific hedge funds failed to warn that "an investor could lose all or a substantial amount of his or her investment," according to the NASD.

"For a sales-material and advertising case, this is a significant sanction," said Barry Goldsmith, head of the office of enforcement at the NASD.

Goldsmith warns the industry that the NASD will come down hard on anyone running careless advertisements.

Currently, hedge funds are not allowed to advertise publicly in newspapers and must be very careful about who gets the promotional material.

The Securities and Exchange Commission will hold public hearings on hedge funds next month, as it considers imposing new restrictions on loosely regulated hedge fund industry.

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