A boom in solicitousness, generally

September 23, 2013

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It’s a big day for solicitation. Thanks to provisions in the JOBS Act that go into effect today, startups can now openly take to the Internet to ask for investment dollars from wealthy investors. Meanwhile, hedge funds are now also free to advertise — along with, as the NY Post suggests, more subtle changes “such as fund managers talking openly about their performance to reporters and on television.”

Adrianne Jeffries has the best rundown of how this will all work for startups — in every conceivable circumstance, she says, it’ll result in the general public seeing more advertising. The JOBS Act now frees private companies to raise up to $1 million per year from “accredited investors” — those with a net worth over $1 million or with at least $200,000 in annual income over the last two years.

Jenna Wortham writes that there are doubts that the JOBS Act will even do that much: “if a company raises more than $500,000 it will have to produce audited financial records — a significant expense for a young business.” Fred Wilson, while in favor of easing the solicitation rules for startups, says the SEC’s rules are diluted to the point of being a “non-starter in startupland.”

SecondMarket’s Mark Murphy, on the other hand, tells Simone Foxman that “this is the most significant change to the capital markets since the 1930s.” Foxman notes that the JOBS Act blurs the SEC’s long-held regulatory distinction between public and private companies, letting a good deal more of the 8.5 million Americans who fall into the “accredited investor” demo get into the startup game. That change, she writes, could remedy America’s souring relationship with the IPO.

As for hedge funds, it will likely be smaller funds that rush into advertising their alpha. “Larger funds are turning away money already—they have their pick of investors,” says the head of PR firm Burson-Marsteller’s hedge fund practice. In July, Felix argued that the rules could push hedge funds to beef up their online presence, and ultimately toward greater transparency.

One immediate impact of the JOBS Act  could be a boom in solicitousness, generally: “For those who say the JOBS Act didn’t create any jobs: You should see my inbox. Lots of new companies formed around general solicitation,” Dan Primack tweeted. There are, as Lora Kolodny writes, already several startups that will identify and digitally badgify accredited investors.  – Ryan McCarthy

On to today’s links:

Wonks
The non-partisan, urgent economics of climate change – Felipe Calderon and Nicholas Stern
Krugman: You are free to be hungry – NYT
Cows as safe assets – FT Alphaville

The Fed
Janet Yellen is either a “Mad Men”-style tyrant or a nice person, depending on who you ask – WSJ
NY Fed’s William Dudley on why he didn’t support the taper in last week’s meeting – NY Fed

Oxpeckers
Anna Wintour is now the de facto head of Conde Nast – David Carr

Your Retirement Plans
Yes, even a $100,000 salary can mean flipping burgers in your old age – Bloomberg

Apple
Apple’s more expensive new iPhone is outselling its cheaper model 4-to-1 – Quartz

FOIAlpha
Hedge funds’ latest source of nonpublic information: The Federal government – WSJ

Crisis Retro
AIG, now with 75% less “derring-do” – WSJ

Quotable
“At one point in my career I interviewed traders. My most important objective was to find the sane ones” – Guardian

Explained
When check cashing is a better alternative than banking – Atlantic Cities

Servicey
NY attorney general cracking down on fake Yelp reviews – NYT

Health Care
When a $100 insurance check can save you $200,000 – Salon

Investing
Start hoarding dark chocolate now – WSJ

Data Points
The opportunity cost of buying iPhones and Cronuts – Ben Walsh

JP Morgan
JPM’s top lawyer used to be a regulator who believed in punishing management for compliance failures – NYT

 

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