Crains New York - June 24, 2013 - (Page 4)

Discover True Client Service. IN THE MARKETS by Aaron Elstein BARRY SILBERT hopes to expand his firm by connecting hedge funds to investors. buck ennis Above and beyond is our starting point. Discover Excellence in Commercial Real Estate Services. Discover Cassidy Turley. Peter Hennessy President, New York Tri-State Region 212.318.9790 Peter.Hennessy@cassidyturley.com www.cassidyturley.com Project & Development Services / Tenant Representation / Project Leasing / Property Management / Corporate Services / Capital Markets Facing up to hedge-fund ads A nyone who rides the subway has seen ads for Jonathan Zizmor, the dermatologist who promises to transform pimply faces into marvels of clear complexion. Soon, Dr. Z may have a challenge of his own: fighting for ad space with hedge-fund managers. Thanks to federal legislation passed last year, hedge funds may soon be able to market themselves directly to the public, ending a decades-old ban. Mary Jo White, the new chairwoman of the Securities and Exchange Commission, has indicated she wants the new rules finalized soon. Once adopted, they would not only free hedge funds to seek investments from all and sundry, but would also make it easier for small companies to reach out and raise money from the man on the street—or riding the subway. Into this brave new world steps Barry Silbert, one of Wall Street’s most successful entrepreneurs of the past decade, offering to play the role of broker. Mr. Silbert is the founder of SecondMarket, a firm that specializes in helping employees at places like Facebook or LinkedIn sell restricted shares before their companies go public.Now his firm is aiming to expand by helping to connect hedgefund managers and small firms with investors as soon as the government gives the green light. SecondMarket would enter this marketplace with its database of 100,000 prequalified customers, people who have been vetted and deemed suitable for investing in risky securities. The potential market for linking private companies with citizen investors is huge. Hedge-fund managers and fledgling companies raised $895 billion via private offerings in 2011, according to the SEC. That was just shy of the $984 billion worth of stock or debt raised through publicly registered deals. “The new rules are going to revolutionize the fundraising business,” Mr. Silbert predicted. $3.3T To help ensure that people don’t get fleeced, Mr.Silbert said,his firm will conduct background checks on fund managers and others seeking to raise money via SecondMarket, though he declined to give details on how it would do that.That is important, as he cautions that many of the hedge-fund managers and small companies seeking to raise money will be second-tier players. Still, exposing the general public to hedge funds sounds like a terrible idea. Here’s one reason: According to a study earlier this year by professors at Oxford and Duke universities, 49% of a sample of 12,128 hedge funds revised their previously reported monthly performance data between 2007 and 2011.Nearly 30% of them ended up making “very substantial changes.” In a letter to the SEC in May, Barbara Roper, director of investor protection at the Consumer Federation of America, and Mercer Bullard, president of Fund Democracy, said the data “do not reflect an occasional exaggeration of performance, but rather an extraordinarily cynical, calculated disregard for truthful performance reporting.” Ⅲ PRIVATE CAPITAL INFLOWS to emerging markets over the past three years, according to the Institute of International Finance. That flow has gone into reverse this year as investors yank billions out of Turkey, China, Brazil and others. 4 | Crain’s New York Business | June 24, 2013 http://www.cassidyturley.com http://www.cassidyturley.com http://www.crainsnewyork.com/events-manhattanboroughforum http://crainsnewyork.com/events-lawsky http://crainsnewyork.com/events-lawsky

Table of Contents for the Digital Edition of Crains New York - June 24, 2013

Crains New York - June 24, 2013
IN THE BOROUGHS
IN THE MARKETS
THE INSIDER
SMALL BUSINESS
BUSINESS PEOPLE
OPINION
ALAIR TOWNSEND
GREG DAVID
REAL ESTATE DEALS
REPORT: 50 MOST POWERFUL WOMEN IN NEW YORK
CLASSIFIEDS
DIGITAL NY
NEW YORK, NEW YORK
SOURCE LUNCH
OUT AND ABOUT
SNAPS

Crains New York - June 24, 2013