Open trading account 
I’m not sure how applicable or even interesting it is for the forex community, but I thought I would share with you big news that just happened in the investment/asset management world in the United States. The US regulator, Securities and Exchange Commission (SEC) voted to allow hedge funds and other private firms to raise money by advertising to the general public for the first time in decades.
Currently, hedge funds and private equity firms that issue private stock are allowed to solicit only wealthy individuals, who can presumably withstand potential losses. But by October, 2013 hedge funds and private equity firms will be able to advertise to the general public via e-mail, billboards or even Facebook — expanding their reach to a much wider circle of potential investors.
Opponents argue that lifting the advertising ban would unduly expose unsophisticated investors to fraud, because investors might not be financially sophisticated enough to understand and evaluate the information. Also, investors faced with high-pressure sales tactics will be unable to distinguish between legitimate offers and schemes.
On the other hand, the proponents or the business community, argue that the new mass-marketing rule is a long overdue update to a 1930s regulation that has thwarted entrepreneurship and kept many investors in the dark about promising opportunities. Lifting the advertising ban makes sense. In the age of the Internet and social media, it is of little use to limit who should know about private offerings and far more important is to restrict who can buy them.
As a background, US Congress directed the SEC to lift the advertising ban as part of broader bipartisan measure known as the Jobs Act, which aims to make it easier for small firms to grow, raise money and hire workers. Since the measure was enacted more than a year ago, the SEC has struggled to strike a balance between the business community’s desire for more capital and the need for investor protections. The SEC has been blasted by some lawmakers for dragging its feet.
Also, the SEC adopted another rule that will restrict the ability of firms associated with felons and other “bad actors” from taking advantage of the new advertising rules.
In addition, the SEC approved a proposal that would require firms that solicit the public to disclose more information about themselves and notify the SEC in advance of a solicitation.
Now, the biggest concern is the definition of an “accredited investor.” Under the new rule, the SEC will allow firms to advertise to whomever they want. But only accredited investors with a certain net worth or income will be allowed to make a purchase.
Anyone with a net worth of more than $1 million (with or without a spouse) or an income exceeding $200,000 (or $300,000 with a spouse) would qualify as accredited. A person’s primary residence is not part of the net-worth calculation because of a recent change in law. It will be up to the firms to take “reasonable steps” to verify that investors are accredited.
However, the net-worth and income thresholds have not been adjusted for inflation since 1982, and Congress has barred the SEC from making immediate adjustments. Investor advocates say the thresholds are far too low.
I guess concerns about scams can be addressed through existing anti-fraud laws and laws that govern oversight of the securities industry. Potential investors are not likely to be deluged with advertisements, in part because firms don’t want to waste money trying to reach people who are not qualified buyers. Instead, it’s expected for firms to take advantage of the new rule by posting information on their websites, or speaking freely about their products at conferences, or responding to questions about their products — all things they could not do with the solicitation ban in place.
Now, of course, it does not mean that the SEC should not take steps to pursue additional investor safeguards and more guidance from the SEC might come later. So, the saga to be continued….