You can now read 5 articles in a month for free on BostonGlobe.com. Read as much as you want anywhere and anytime for just 99¢.

SEC lifts ban on hedge fund advertising

WASHINGTON — For the first time, hedge funds will be allowed to advertise to the general public. The Securities and Exchange Commission voted 4 to 1 Wednesday to lift a ban on hedge funds, private equity firms, and other private investment managers marketing products to a wide audience.

Unchanged is that hedge funds can sell securities only to investors with a net worth of at least $1 million, excluding primary residence, or annual income of more than $200,000 (or $300,000 with a spouse) in each of the two most recent years. About 7.4 percent of US households have a net worth of $1 million or more.

Continue reading below

Investor advocates worry that allowing hedge funds to advertise could lead to more fraud. It ‘‘will make fraud easier by allowing fraudsters to cast a wider net for victims,’’ said Commissioner Luis Aguilar, the only commissioner to dissent.

The SEC proposed to monitor the ads and collect data on how they affect the market.

Lifting the ban will weaken investor protections, said Senator Carl Levin, Democrat of Michigan. The SEC rule ‘‘puts essentially no effective limitations on the types or forms of advertising that can be used to promote high-risk investments,’’ he said.

An association representing state regulators said it was disappointed the SEC acted before installing investor safeguards.

Barry Silbert, the CEO of SecondMarket, a private stock exchange, called the SEC’s action ‘‘an important step forward in bringing today’s regulations into the 21st century.’’

‘‘After today, a much deeper, broader group of investors will have the opportunity to hear about — and potentially invest in — private companies and funds,’’ he said.

Loading comments...
Subscriber Log In

We hope you've enjoyed your 5 free articles'

Stay informed with unlimited access to Boston’s trusted news source.

  • High-quality journalism from the region’s largest newsroom
  • Convenient access across all of your devices
  • Today’s Headlines daily newsletter
  • Subscriber-only access to exclusive offers, events, contests, eBooks, and more
  • Less than 25¢ a week
Marketing image of BostonGlobe.com
Marketing image of BostonGlobe.com
Already a subscriber?
Your city. Your stories. Your Globe.
Yours FREE for two weeks.
Enjoy free unlimited access to Globe.com for the next two weeks.
Limited time only - No credit card required!
BostonGlobe.com complimentary digital access has been provided to you, without a subscription, for free starting today and ending in 14 days. After the free trial period, your free BostonGlobe.com digital access will stop immediately unless you sign up for BostonGlobe.com digital subscription. Current print and digital subscribers are not eligible for the free trial.
Thanks & Welcome to Globe.com
You now have unlimited access for the next two weeks.
BostonGlobe.com complimentary digital access has been provided to you, without a subscription, for free starting today and ending in 14 days. After the free trial period, your free BostonGlobe.com digital access will stop immediately unless you sign up for BostonGlobe.com digital subscription. Current print and digital subscribers are not eligible for the free trial.