For a Congress that once moved at the same pace as I-95 in Stamford at 5:21 p.m., this one is doing quite a bit.
This week, the crew inside the beltway actually passed a couple important pieces of legislation that could allow hedge funds to advertise as well as ban Congressmen from engaging in insider trading.
First, they passed the Stock Act, which bans insider trading by Congress, the Executive branch and employees within. It’s been criticized, because one version allows political intelligence companies to continue to operate and not report. Some advocates wanted groups to register as lobbyists, which might have forced some hedge funds to either break all contact with their federal representatives or divulge information about their businesses, they would not otherwise like to do.
In another landmark bill, called the Jobs Act, Congress removed the ban on general solicitation of private offerings. While these offerings can still only be sold to accredited investors, the very wealthy or institutions, the hedge funds will be able to advertise. The act also loosened up some of the regulations on raising capital by small businesses and on going public.
U.S. Congressman Jim Himes, D-4, advocated for reducing regulatory burdens on smaller companies and to provide some help to them to go public. He said he was however, concerned by the Republican version that passed the house that defined small business at $1 billion or less. He said it should have been lower.
He was also concerned by the crowd funding provision of the act, which will enable people to raise money on websites from a collection of small investors. The SEC is studying the issue and reported to Congress it has concerns about the enterprise and how to regulate it. Himes said, however, the SEC concerns popped up after the fact.
Still, Himes said he voted for the Jobs Act warts and all because in the end it is the right thing to do to help spur economic expansion.
Meanwhile, over in Westport, Rick Slavin, head of Cohen and Wolf’s securities unit and a former state regulator, was not upbeat about the Jobs Act. Slavin is not running against Himes for the fourth Congressional seat, though it appears just about everybody else is.
They should have called it Loosen up Regulations Act, Slavin said.
Slavin said he’s concerned about the advertising because it could trip up some unsophisticated investors, who might have sizeable nesteggs, but not the experience or even the ability to invest in complex and risky transactions.
On the crowd funding front, Slavin said he’s just worried Congress has created a credit market without enough controls.
In the end we’ll be looking into these moves more deeply in coming months.
And at the very least, Congress appears to have created some work for advertisers creating campaigns and most importantly, catchy songs for hedge funds.
In that spirit, The Mines presents a word from our potential new sponsor any new hedge fund: Sung to the tune of Do your ears hang low.
Do you want to make a million
Do you need a little thrillin
Try our latest offshore fund
It’s way better than a pun
Your portfolio will rise
Higher than the tides
If you want to make a million (Insert sponsor name here..)