Morning Coffee Aug 30 2012

Hedge Fund Ad Rule Appears Dead

By Beecher Tuttle

An 80-year-old rule preventing hedge funds from mass-marketing their services is on the verge of being scrapped.

The U.S. Securities and Exchange Commission on Wednesday didn't add any restrictions to a proposal mandated by Congress that would reverse the ban. Supporters of the measure worried that the SEC would attach restrictions to the proposal that could make it difficult for hedge funds to communicate and partner with investors, essentially nullifying the mandate, according to The Wall Street Journal.

The move isn't expected to do all that much for larger hedge funds, which have little problem reaching rich, easily verifiable investors, but it may help smaller hedge funds that find it difficult to build name recognition, according to the New York Times.

If hedge funds start marketing hard, they could steal market share from mutual funds, which have historically been free to market their services as they see fit. Critics fear allowing such advertising could encourage investment scams by smaller, lesser-known hedge funds that have plagued the industry for more than a decade.

On the other hand, the proposal could help level the playing field, giving smaller hedge funds more capital to play with and, in turn, greater reason to add staff.

The SEC is expected to fast-track the proposal soon after the required 30-day comment period.

Divorce Finalized (WSJ)

Mark Adelson, who had been Standard & Poor's chief credit officer, left the firm on Monday, eight months after being demoted to a senior research fellow. Adelson lost his high-profile role following a series of perceived missteps that contributed to losses in business for S&P.

WellPoint CEO Out (Bloomberg)

WellPoint chief executive Angela Braly resigned late Tuesday under pressure from investors who are concerned about where the U.S. health insurer is headed. Shares of WellPoint have dipped slightly over the last 12 months; shares of its closest rival, UnitedHealth Group, have risen nearly 20%.

Avondale Expanding (FIN Alternatives)

Avondale Partners, a Nashville, Tenn.-based investment bank, hired two new directors, Patrick Davis and David Hale, who will be responsible for the firm's long/short equity hedge fund business.

This One's On Us (AP)

If you're under the age of 25 and live in France, the chances are decent that you're unemployed. France's new Socialist president, Francois Hollande, has proposed that the government pay the majority of a young person's salary who remains on a company's payroll for at least a year.

New Charges (FIN Alternatives)

Three hedge fund managers charged with insider trading in Dell shares face additional indictments for improperly trading Nvidia stock. The three men – Anthony Chiasson, Jon Horvath and Todd Newman – could still see new indictments tacked on before their October trial, according to prosecutors.

Looking for a New Project (Bloomberg)

David Barrett, a veteran Morgan Stanley money raiser who ran the firm's private capital markets business, is leaving the company – and the banking industry – after 22 years.

Johnson & Johnson (Reuters)

Abigail Johnson, daughter of Fidelity chairman and chief executive Edward Johnson, has been named president of the Boston firm, setting the stage for what many assume to be a gradual succession plan.

Cuts Looming (Financial News)

U.S. investment bank Jefferies may soon cut as many as 15 research and sales employees across its insurance, consumer, technology and health care teams.

Buzz Around the Office

Child's Play (BBC)

According to research, the sight of babies' faces makes people want to act nicer. That, says advertising agency Ogilvy & Mather, was the inspiration for spray-painting the faces of infants and toddlers on storefronts in a crime-ridden area of London.

List of the Day: How to Ruin an Interview

There are a lot of ways to mess up your chances of landing a job. Here are a couple:

1. Slouch in your seat.

2. Click your pen. Constantly.

3. Show signs of pessimism.


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