kaal:claim:2715083-033

The JOBS Act reform underdelivers on its own terms: because investor verification under Rule 506(c) is legally uncertain, hedge fund advisers have better incentives to launch retail alternative funds than to use their new freedom to advertise.

Investment advisers to hedge funds have better incentives to set up retail alternative funds that allow them to offer features that are attractive to retail investors rather than to advertise under the uncertain new regime (Rule 506(c))

Kaal, Confluence of Mutual and Private Funds (2016), V.3 Retail Alternative Fund Growth, p. 19
https://ssrn.com/abstract=2715083 · source PDF

Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083

• Rule 506(c) offerings after the general solicitation ban was lifted
• also driven by path dependencies and peer pressure

failuresupport: arguedfailure: General solicitation nonadoptionfamily: adoption-and-usability-barriercitation-and-knowledge

• extends kaal:claim:2714974-018 New Rule 506(c) creates uncertainty for hedge fund advisers considering general solicitation and general adver...
• restated_by kaal:claim:2739479-014 Lifting the ban on general solicitation and general advertising was a significant formal change for private fu...
• extends kaal:claim:2714974-019 Although the JOBS Act rules freed hedge fund managers to advertise, talk to reporters, and speak at conference...

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