Pepper partner Gregory J. Nowak was quoted in Financial Times in the article "Definition Is Key in Brave New World" on the September 30, 2013.
Gregory Nowak, partner at Pepper Hamilton, says concerns that the new rule will swipe market share from mutual funds may be overstated. Registered funds have a big advantage of fitting nicely into 401(k), annuity, individual retirement accounts and other retirement plans, where private and non-regulated funds would have a hard time finding a custodian willing to accept them in such plans, he says.
Under the new rule, hedge funds and private funds still will face high barriers, including most being limited to 100 investors in their funds and requirements that those investors have a net worth exceeding $2m and, in other cases, as high as $5m.
For private fund managers willing to deal with the constraints, the new rule could increase the investor base through mass marketing, Mr Nowak says. He says that reaching investors through their adviser works in the same way as television advertisements from pharmaceutical companies that promote medications to viewers with the expectation that those viewers will approach their doctors and ask about the products.
“Now they will be able to get the word out and potential investors will go back to the gatekeeper and say ‘what about this fund or manager?’”
The article is available online with a subscription at http://www.ft.com/intl/cms/s/097c6ef4-2125-11e3-a92a-00144feab7de,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F097c6ef4-2125-11e3-a92a-00144feab7de.html%3Fsiteedition%3Dintl&siteedition=intl&_i_referer=#axzz2gVQFXYoU.