{"id":353,"date":"2023-08-21T17:00:11","date_gmt":"2023-08-21T21:00:11","guid":{"rendered":"http:\/\/www.accreditedinvestorleads.com\/?p=353"},"modified":"2023-08-21T17:00:14","modified_gmt":"2023-08-21T21:00:14","slug":"hedge-fund-advertises-rule-506c","status":"publish","type":"post","link":"https:\/\/www.accreditedinvestorleads.com\/hedge-fund-advertises-rule-506c\/","title":{"rendered":"Hedge Fund Advertises Private Offering Using Rule 506c"},"content":{"rendered":"

Last year the SEC lifted the ban on general solicitation (rule 506c), per the JOBS Act. \u00a0This enables private companies, hedge funds, and overall issuers of private placement offerings to advertise their deals to the general public. \u00a0The caveat is that the advertisement must specifically state that the offering is for accredited investors only. \u00a0While it may be in a public magazine, television station, radio show etc. the general public is not permitted to invest through 506c of Regulation D.<\/p>\n

This is great news for those looking to raise capital but many have been fearful about issuing advertisements for obvious reasons. \u00a0If you are among the first to do so you are guaranteed to have the SEC reviewing what you are doing for potential violations.<\/p>\n

Remember that if you advertise under rule 506c you must verify the accreditation of every investor and keep that information on file.<\/h3>\n

Balyasny Asset Management is a Chicago Hedge Fund that has dipped it’s toes in the water by advertising in a magazine. \u00a0Their half page ad ran in Pensions & Investments on February 3rd. \u00a0The copy said,\u00a0\u201cPerforming In All Conditions. Providing Strong Risk Management & Absolute Returns Since 2001.\u201d<\/p>\n

Balyasny isn’t the only firm to advertise since the general solicitation ban was lifted. \u00a0Bridgewater Associates and Pershing Square Capital have created generic YouTube videos. \u00a0All three of these firms are using the advertising as a way to promote their brand, not specific deals. \u00a0This is where small issuers and companies can differentiate themselves. \u00a0Rule 506c requires that investors be accredited if the specific deal is being advertised. \u00a0This may be more of a daunting process for large firms but small companies gathering a specific number of investors may find this to be more manageable, enabling them to publicly advertise each private offering.<\/p>\n

One of the concerns many people have about the rule 506c is that the SEC has kept the rules surrounding advertisements ambiguous at best. \u00a0There are no set guidelines or boundaries, only the understanding that you can be penalized if you mess up. \u00a0This is not a comfortable place to operate in. \u00a0Issuers should error on the side of caution when creating ads and avoid promising any type of return or giving too many details.<\/p>\n

Ideas for Advertising a Private Offering<\/strong><\/p>\n