On July 10, 2013, federal regulators adopted a rule lifting a ban on mortgage pool advertising. The ruling, allows hedge funds to advertise to the general public to offer their securities, once the issuer takes reasonable steps to verify that investors are accredited. The ban on mortgage pool general advertising has been in effect since 1933, during the Great Depression.
The ruling is welcome news for fund managers, because it increases their ability to attract capital. Experts agree that now is an opportune time to set up a mortgage pool. The lifting of the ban should take effect by mid-September 2013, allowing many private funds and companies to raise private capital under Rule 506 to advertise and solicit accredited investors in their Reg D offering.