Photo: PBS Newshour
Among the provisions in the recently-passed JOBS Act is one lifting 80-year-old restrictions on how hedge fund managers can recruit investors — including using advertising.But for MIT Professor Andrew Lo, one of our favourite finance gurus and a hedge fund manager himself, the news is a mixed blessing.
WSJ’s Ian Salisbury quotes Lo’s reaction to the bill’s passage:
“As a hedge-fund manager, I’m delighted, but I’m not sure it’s in the best interest of the public.”
The concern, among finance professors including, apparently, Lo, is that hedge funds will use the same tactics as mutual funds to convince investors that they should use past performance as a principal measure for where to invest, Salisbury writes.
The new law “adds a whole new set of funds that are going to do the exact same thing,” said Ahmed Taha, a law professor at Wake Forest University.
In an email, an SEC spokesman told Salisbury said the agency was still analysing the bill’s provisions.
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