Kelli Moll Quoted on SEC’s Exams of Hedge Fund Advertisements

Despite looser rules on hedge fund advertising, some firms are pulling back from their plans to do so, according to Akin Gump investment management partner Kelli Moll. The reason, Moll explains in the FundFire Alts article “SEC Examines First Hedge Fund to Advertise,” stems from a fear of being examined by the Securities and Exchange Commission. She says, “There was a lot of concern by the more liberal members of the [SEC] committee that [advertising] would be a gateway to a lot of fraud, and so there is going to be enhanced scrutiny.”

The SEC requires that investors considering investing in a firm meet certain criteria. Moll points out that, under the JOBS Act, backup information, such as a tax return, bank reference letter or letter from an accountant, is required to ensure investors meet the accredited investor requirement. She adds, “You have to do something more than rely on a subscription document representation.”

Moll says smaller hedge fund firms may be more willing to advertise in the future: “You might see that down the road, if they think getting their name out there and getting more publicity will help them in increasing their investor base.”