The JOBS Act has opened up a number of doors for Wall Street and the investing public.  One of those doors may provide investors with a keyhole view into the secretive world of hedge funds and private equity firms - thanks to a little-known provision in the bill that would relax rules on how investment firms can market themselves to the public. The Jump-start Our Business Start-ups Act, or JOBS Act, would reverse parts of a nearly 80-year-old regulation that has prevented these funds from divulging even the most basic items with outsiders - e.g., performance or investment strategy.  The rule, part of the Securities Act of 1933, gave an already secretive industry the regulatory cover to remain silent. Tripp Kyle, a partner with the PR firm Brunswick Group, said, "It’s a dramatic change from where the industry is," and "I think it presents a real opportunity for firms to evolve their mind-set from what they can’t do to what they can and perhaps should be doing." President Obama is expected to sign the bill next month, which passed the 2 Congressional houses with a bi-partisan vote, enables hedge funds and private equity firms to solicit investors directly, instead of through 3rd parties - which typically vet the firms before introducing them to clients. The good news is that the new provisions could ease the path to fund-raising;  the bad news is that it could also introduce new risks to small investors unaccustomed to the complex and risky strategies the firms deploy. Skadden Arps partner Philip Harris said, "If you have a blizzard of advertising, it’s going to be much more difficult for people to do due diligence.”  [C-I Note: We say that who, among the investing public, know from due diligence?  When they get annual reports from public companies, they simply look at the pictures.] Others say a new advertising climate would change little about the way individuals look at so-called alternative investments, because the usual "buyer beware scenario” will still apply. Spotlight Grows Bigger, Hotter. The usually secretive hedge funds and PE firms have been under the microscope the past couple of years - given the government's highly-publicized insider trader investigation.  PE firms can attribute their fame to the probable Republican candidate for President, Mitt Romney.  And with the bigger and hotter spotlight comes further scrutiny from the government and their own investors, who would like nothing more than additional transparency.  The industry has responded by rapidly institutionalizing, tossing aside its freewheeling  culture for large operations with top-notch compliance teams. SEC Final Edits. The final rules would be written by the SEC within 90 days of the bill’s signing, and the Commission is already seeking comments from the industry.  What this means, is that a lot could change through the process, including just how broadly the hedge funds can market themselves.  But there is little argument in the industry that the move is a much-needed update to the current regulations. "I think the impetus for this act is to modernize a lot of these rules to bring them in line with 21st-century practices," said Steven Nadel, a partner at the law firm Seward & Kissel. The Untouchable Restriction. One rule that will not be affected is the restriction on who can give money to hedge funds and private equity firms.  Firms will still only be able to accept money from accredited individuals - i.e., those with more than $1 million of money to invest.  And although the money managers may be allowed to advertise their returns, they will probably not be required to do so, meaning that investors could get an overly rosy view of the industry. For the larger funds, the new law may not change much. Slick 30-second commercials from major hedge funds like Paulson & Company, the $24 billion fund run by John A. Paulson, are unlikely to start appearing on network television: for the bigger players, the client base is largely institutional, and therefore less swayed by mass marketing. "The big takeaway is that it wouldn’t impact me one way or the other," said John Brynjolfsson, head of the hedge fund Armored Wolf, which manages about $800 million in largely institutional assets.  "This doesn’t sound like it would have a major impact on how we do our business." For smaller funds that may not have great media exposure, the relaxation of rules could prove valuable, allowing firms to communicate with a wider range of investors. "A lot of the time, once legal counsel is done with your marketing material, it’s impotent," said Abhinav Shukla, a founder of AlphaHarvest Capital, a small New York-based hedge fund. A change in the marketing restrictions for hedge funds, Mr. Shukla said, would allow him to build a more robust Web site for his fund without angering lawyers or regulators.  The site, he theorized, could include not only photographs of him and his business partner, but also information about the fund and recommendations for specific types of investors. Click for the referenced story:  [Dealbook, 3/29/12].