Going back over my notes in search of guidance on when advertising for a private equity firm is advertising restricted under the Investment Advisers Act and when it is advertising for the firm’s products and services, I’m left uncertain.
I was hoping that the gun jumping interpretations would offer some meaningful guidance. So far, I have not found much hope.
My concerns arose from some second-hand rumors about what the Securities and Exchange Commission has been attacking during examinations of private equity firms and real estate firms that are registered as investment advisers. One story was about a fund manager having to take down references to a real estate industry award on the firm’s website. The award sounded like one focused on real estate operations. Using my earlier standard, the award sounded like an award for making good soup not for having good securities.
That leaves real estate fund managers registered as investment advisers at a competitive disadvantage to real estate sponsors who are not registered as investment advisers. The public real estate companies have some guidance under Rule 168 and Rule 169 as to what is advertisement.
Registered real estate fund managers may have to operate in a gray area trying to decide when an advertisement is about the real estate soup. Otherwise they risk the vagaries of an SEC examiner deciding an advertisement violates the Investment Advisers Act.
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