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A conversation with attorney and author Timothy Spangler.
Timothy Spangler is an attorney, academic and commentator who divides his time between New York and Los Angeles. His recently released book, "One Step Ahead: Private Equity and Hedge Funds After the Global Financial Crisis," is an attempt to bring alternative asset managers out of the darkness for readers who think hedge funds and private equity firms are inherently mysterious or mischievous.
In person, Spangler is funny and wry, and when our in-person conversation the other week was cut short due to weather-related travel issues, we continued it over email:
Josh Friedlander: You chalk up a good deal of vitriol against hedge funds to mainstream ignorance of their substantial role as managers of public money (hence the headline of this piece), and the willingness of cynical politicians to exploit that information gap. Do you think that ignorance will diminish as hedge funds become more public? Balyasny recently ran an advertisement in Pensions & Investments, and Galtere is using a video to market itself!
Timothy Spangler: I hope so. To the extent that hedge fund managers take advantage of the new JOBS act rule, we could see more information about these funds circulating to the general public. This would be a good thing. Although over the years they have been branded "secretive" and "shadowy," it has been because of the prohibition on general solicitation and general advertisements contained in Regulation D that hedge funds have so severely limited their interaction with the media.
JF : Yes, although the law doesn't just let anyone market. They have to select the exemption under rule 506(c) of Regulation D of the 1940 Act, which carries the burden of vetting the accreditation of one's investors. Some will embrace this and others won't. On a larger level, is Fidelity not hated just because they advertise or is there more to it? Will advertising or having a bigger public face really change perceptions of hedge funds?
TS : I think there are two angles here. First, advertising as a means to expand the assets in these funds and bring new investors into them. Second, advertising as a way to mold or drive public opinion, regardless of whether the individual ever actually invests. The...