Lawmakers Challenge Hedge Fund Ad Rules

Two lawmakers are warning Securities and Exchange Commission Chairwoman Mary Jo White that the agency must withdraw several amendments governing the newly allowed hedge fund ads or run afoul of the law.

In a July 22 letter to SEC Chairwoman Mary Jo White, Rep. Patrick McHenry, R-N.C., chairman of the Financial Services Subcommittee on Oversight and Investigations, and Rep. Scott Garrett, R-N.J., chairman of the Financial Services Subcommittee on Capital Markets, take issue with Proposed Rule 503, which they say “requires private issuers to file a wildly expanded Form D 15 days before” they start advertising.

"Congress did not say that the commission can delay free speech for 15 days," they wrote.

The lawmakers state that although they support the rule lifting the ban on hedge fund advertising, they request in their letter that the SEC withdraw Proposed Rule 503 “in order to uphold the intent of the law.”

Congress "specifically required the commission lift the ban on general solicitation for those Rule 506 offerings that solely target accredited investors and qualified institutional buyers," they wrote, arguing that the waiting period is in effect a ban, and that completing the paperwork requires "hiring qualified counsel" and can stretch the wait far longer than 15 days.

They called the pre-filing requirement "yet another unnecessary burden that prevents small businesses from accessing capital that they need to grow and create jobs.”

Garrett said in the letter that the SEC’s “proposed amendments to Form D filings — over the objections of two commissioners — are not called for under Section 201 of the JOBS Act.”

But A. Heath Abshure, president of the North American Securities Administrators Association President and Arkansas Securities Commissioner, says that McHenry and Garrett "fail to appreciate the need to balance the needs of business with the needs of investors" by asking the SEC to withdraw proposed Rule 503. "Such a failure would result in an unregulated ‘wild west’ market in which their constituents will lose money. Ultimately, their constituents will lose confidence in these new markets, stop investing, and look to Reps. McHenry and Garrett for answers. We encourage the SEC to resist this shortsighted political pressure and  move as expeditiously as possible to adopt the proposed investor protection amendments to Regulation D and Form D."

The lawmakers also took issue with the requirement under proposed Rule 510T to file all ads with the SEC for the first two years the rule is in effect. "Samples of data should clearly suffice" for market evaluation, they said, adding that for compliance purposes, the commission could gather the ads itself since they will be public.

They also criticized the mandate of "canned" disclosures on ads under Proposed Rule 509, saying that "in this modern Internet age ... investors generally ignore standard disclosures, either because of their overuse or limited utility."

These amendments, they wrote, “would likely increase regulatory burdens on small businesses seeking to conduct Regulation D offerings and thereby undermine the fundamental goals of the JOBS Act.”

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Check out Surprise! Not Every Hedgie Loves the Lifted Ad Ban on ThinkAdvisor.

7 personal finance lessons to learn from Katrina Kaif

Inspirations come in all shapes and sizes. You would surely agree that Katrina Kaif as an inspiration is not only shapely but also quite beautiful.

Katrina was a total novice when she entered the Hindi film industry. She had no knowledge of films. Worse � she couldn�t even speak the Hindi language properly. Yet within a short span of 5-7 years she has become one of the most successful actresses in the Hindi film industry.

Many amongst you too would have no knowledge of the personal finance industry. Worse � you wouldn�t even understand the financial language. But if you are willing to work hard like Katrina, there is no reason why you too can�t become a successful manager of your money.

Lesson 1: Background and past do not matter; what matters is what you do with your present.

Her first movie was called Boom, which ironically went totally bust (even though it also starred the legendary superstar Mr. Amitabh Bachchan). But she didn�t let the super-flop discourage her. Instead of feeling sad or sorry about it, she turned the failure into a lesson. You too will experience many failures when you start investing. But don�t let them deter you. No one can be 100% successful. All you have to aim for is to have more wins than losses.

Lesson 2: Don�t be discouraged by failures, instead learn from them.

To guide her during the initial years, she found herself a mentor. He acted as her friend, philosopher and guide � educating her about the nuances of the films and film industry. More importantly, she was a willing student who worked very hard to absorb all the lessons. You too should find yourself a financial advisor who will pass on all the knowledge to you. More importantly, you should be a willing student. After all, you have to score your own goals. A coach cannot do it for you.

Lesson 3: Find yourself a mentor and be willing to learn.

The first few years of her career she worked with established and successful stars only. You too should begin your investments with large and established companies/mutual funds. There is no point in taking risks until you understand the game.

Lesson 4: To start with, invest only in top-rated and successful companies/mutual funds.

She found a certain comfort level with Akshay Kumar and gave many hits working with him. She didn�t try to experiment too much or work with many stars. Identify a few investment options that you easily understand and are comfortable with. Don�t buy too many different financial products in the initial years of your investment.

Lesson 5: Stick with a few simple investment products in the early years.

It was only when she started understanding the Hindi film industry and achieved reasonable success that she moved to younger upcoming stars such as Ranbir Kapoor, Imran Khan and Ali Zafar. She also took to doing items songs. Had she done item songs in early part of her career she would have remained an item-girl only. Only when you get a hang of the personal finance industry and have made some successful investments, should you consider investing in different products and upcoming companies. If you start with Futures/Options you will never become a successful investor.

Lesson 6: Move to riskier and specialized products only after you become a reasonably successful investor.

It would be wrong to attribute Katrina�s success to only her face and contacts. Starlets with prettier faces and better connections didn�t shine long enough. You won�t even remember their names. Ultimately, it is her attitude and dedication towards her work that has given Katrina all the success, fame and money. Likewise, the likelihood of you too becoming a multi-millionaire would be determined by just how good you are at managing the resources you have.

Lesson 7: Only �attitude� matters; rest is just a matter of details.

Professions may differ, but the underlying rules to success remain the same. Pick up any person you admire � Sachin Tendulkar, A.R. Rahman, Narayana Murthy, Kiran Bedi, Sonia Gandhi, etc. � and make him/her your inspiration. Success is waiting for you. Are you ready to grab it?

Sanjay Matai is a personal finance advisor ( http://www.wealtharchitects.in/ ) and author. � Millionaires don�t eat cakes�they make them � is his latest publication.

Cytokinetics' Update on Study - Analyst Blog

Cytokinetics, Incorporated (CYTK) recently provided an update on BENEFIT-ALS (Blinded Evaluation of Neuromuscular Effects and Functional Improvement with Tirasemtiv in ALS), the phase IIb study being conducted on its amyotrophic lateral sclerosis (ALS) candidate, tirasemtiv.

The company reported a programming error in the multinational, double-blind, randomized, placebo-controlled study which is evaluating the safety, tolerability and efficacy of tirasemtiv.

Cytokinetics' data management vendor reported that due to a programming error in the electronic data capture system controlling study drug assignment, 58 patients received placebo at a certain study visit instead of tirasemtiv.

The company said that no incorrect treatment was conducted on the patients in the placebo arm. Cytokinetics said that the company as well as trial site personnel remained blinded to the 58 patients affected by the error.

Cytokinetics is taking measures to confirm that no other such errors have been made and the programming defect has been corrected. Cytokinetics also conducted an ad hoc meeting of the study`s Data Safety Monitoring Board (DSMB) to determine that the safety of the 58 patients affected by the error has not been impacted. The DSMB reviewed the safety data and reported that there were no concerns regarding patient safety.

Patient enrolment for the BENEFIT-ALS study is ongoing – the study, which is designed to enroll up to 500 patients, has enrolled 450 patients so far. Cytokinetics said that it may change the current protocol so as to enroll additional patients.

The company is working with regulatory authorities on the most suitable way to respond to the error so that the intended scientific value of BENEFIT-ALS may be maintained.

Our Take

We do not expect the programming error to have a major impact as the study remains blinded and the error was detected well before final analysis. Moreover, the safety profile was not impacted.

Still, we ! believe the company will most likely amend the protocol and enroll additional patients. On its first quarter 2013 conference call, the company had said that results from the BENEFIT-ALS study would be out by year end. However, enrolment of additional patients could push out study results by a few months to early 2014. Study costs will also go up.

An update on the company's plans should be available following discussions with regulatory authorities.

Cytokinetics currently carries a Zacks Rank #2 (Buy). We expect investor focus to remain on results from the ATOMIC-HF study that is evaluating omecamtiv mecarbil in patients with left ventricular systolic dysfunction who are hospitalized with acute heart failure. The company intends to present results in late August-early September.

At present, companies that look well-positioned include Biogen Idec (BIIB), Peregrine Pharmaceuticals, Inc. (PPHM) and Cytori Therapeutics, Inc. (CYTX). All three are Zacks Rank #1 (Strong Buy).

Trend Channel Bounce Trades

These stocks are in strong upward trend channels, but are currently trading near the lower support line. If the channel holds, there is potential for "trend channel bounce trades," as the price rallies off support and heads back toward the top of the channel. Typically these trades are low risk, since the entry point is near the support line and stop-loss price.

Baxter International (NYSE:BAX) has been moving higher within a well defined trend channel since the start of the year. The lower channel line currently intersects near $68.75, although it looks like the stock may already be heading higher before reaching that level. On August 2 Baxter made an intra-day low of $69.31, before reversing course and closing August 6 at $72.03. The upper channel line intersects near $75, which is an area of likely resistance. The risk/reward on this trade isn't ideal given that the profit potential is about $3 and the risk is also about $3 if a stop is placed slightly below $69.31. Therefore, if already long there is likely more upside, but if you're looking to get long being patient and waiting for a bit of a pullback is likely the best option.



United Parcel Service (NYSE:UPS) started its current trend channel in February. The lower channel line is at $86, so I'd be looking to go long anywhere between $87.50 and $86, with a stop-loss order in the $85.50 area. The upper channel line intersects near $93, so the profit target for the trade is just below this. Other than a price surges in May and July though, the price action has been fairly sedate. Therefore, the price will need to breakout above $89.25 resistance in order to potentially reach the $93 target.



SEE: Target Prices: The Key To Sound Investing

Boeing (NYSE:BA) has been in a very strong advance since March, but is currently heading toward the lower part of the rising trend channel. Channel support is at $103.25, so entry between $103.25 and $105 is looking really good. I'd put a stop near $103 and a target near the upper channel line at $113



Interpublic Group (NYSE:IPG) isn't near it's lower channel line right now, but it looks to be heading there. Toward the end of July the stock broke higher out of the trend channel and then quickly reversed, indicating selling pressure near channel resistance. Therefore, a pullback toward $15, and channel support, is possible. I'd look to get in anywhere between $15 and $15.50 with a stop-loss just below $15. The target is the upper channel line and resistance just above $17.



SEE: Trading Is Timing

The Bottom Line
Trend channels highlight rhythmic movements in price. As long as the channel holds, these movements are exploitable by buying near the lower channel line and selling near the upper line. Channels don't last forever though, so a stop-loss order should be used to control risk. Also, it is recommended that you wait for the price to begin moving higher off the lower channel line before going long. This provides a little extra assurance that the support level has held and that the price will likely start to head back toward the upper channel line.

At the time of writing, Cory Mitchell did not own shares in any of the companies mentioned in this article.

Charts courtesy of StockCharts.com.

Is This the Answer to Netflix's Content Problem?

Netflix (NASDAQ: NFLX  ) has a content problem. Despite spending billions each year on titles for its streaming service, the selection is far from complete.

And that's by design. Netflix is an unlimited, low-cost provider, meaning it can't offer everything while charging just $8 a month. The benefit in that approach is that it keeps the service affordable for millions of subscribers, even as an add-on to pricey cable bills.

However, under that model the company risks losing customers who search for particular titles only to find out they're not available. The fact that Netflix can deliver "similar" options just doesn't cut it with many users. And that's why the streamer needs people to browse its existing catalog, instead of searching for a given TV show or movie.

Netflix's latest attempt to get users to browse instead of search is with a service it calls "Max," which it just rolled out to Sony PlayStation 3 owners. Described as a guide that "helps you find something great to watch in a fun, conversational way," the Siri-like personality walks you through a few questions with the aim of recommending a single title you'll enjoy watching right then.

Source: Netflix.

Max takes advantage of Netflix's vast amount of user data to deliver in a quick interaction what its welcome screen does with rows of video choices. That is, Max tries to find what you're in the mood for and then tailors recommendations within that genre based on what you and others have liked in the past.

As tempting as it is to write this service off as a gimmick, I wouldn't be so quick to pan the idea. Netflix has a huge catalog of content and keeps incredibly detailed information about all of it. Anything that can make use of that data -- and get users enjoying shows beyond the most popular titles -- is good news for the company. 

We won't have to wait long to find out if the service is a hit. Assuming it delivers, Netflix plans to roll it out to other devices besides Sony's PS3, with Apple's iPad likely to be next in line. If Max does make the jump to other Netflix platforms, we'll know that the company has made at least some progress in solving one of its biggest problems.

Will Netflix own the future of television?
Even if it succeeds here, Netflix, along with other new entrants such as Amazon.com have bigger plans aimed at disrupting traditional TV networks. The Motley Fool's new free report "Who Will Own the Future of Television?" details the risks and opportunities in TV. Click here to read the full report!

Make Money in These Growing Pharma Stocks the Easy Way

Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you'd like to add some pharmaceutical stocks to your portfolio, the SPDR S&P Pharmaceuticals ETF (NYSEMKT: XPH  ) could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The SPDR ETF's expense ratio -- its annual fee -- is a relatively low 0.35%.

This ETF has trounced the world markets over the past three and five years. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.

Why pharmaceuticals?
A simple answer: demographics. As our global population grows and ages, and lives longer, the demand for health-care products and services seems quite likely to grow. In addition, as developing nations develop, their populations will have more money to spend on health care.

More than a handful of pharmaceutical companies had strong performances over the past year. Biotech company Santarus (NASDAQ: SNTS  ) roughly tripled in value, with an ulcerative colitis drug, Uceris, recently approved. The company posted first-quarter results that featured revenue up 73% and earnings strongly positive. Gastrointestinal disorders drug Zegerid and type 2 diabetes drug Glumetza were big performers for Santarus. Things are looking good for the company, but many think the stock is overvalued.

Pacira Pharmaceuticals (NASDAQ: PCRX  ) surged 81%, and one of its directors might be thinking that it's overvalued, too, as he sold more than $2 million worth of shares recently. (He might simply have been generating cash for some other purpose, however. While insider buying is a bullish sign, insider selling can mean many things.) Several other insiders have also sold shares, though not quite so many. The company has a pain management treatment, Exparel, which is being studied to treat additional conditions, with promising results so far. Pacira's last quarter featured growing revenue but disappointing earnings. The stock has been downgraded by Wall Street, due in part to its debt, which is coupled with net losses and negative free cash flow.

Other companies didn't do as well last year, but could see their fortunes change in the coming years. Questcor Pharmaceuticals (NASDAQ: QCOR  ) , for example, sank 13%. It's largely known for its multiple sclerosis (MS) drug, Acthar, that has sold well in the past and is being evaluated for many more indications. Questcor's management is extremely well regarded and its dividend, which yields 2.2%, was hiked by 25% earlier this year. The stock is heavily shorted, but some see it as a bargain. Questcor has bought the not-yet-approved-in-the-U.S. immune drug Synacthen from Novartis.

Zoetis (NYSE: ZTS  ) , meanwhile, is trading near the lower end of its 52-week range. It was recently spun off by Pfizer and is the world's largest animal health company and a new addition to the S&P 500. Its dividend is on the puny side at the moment, but with a low payout ratio, it has plenty of room to grow.

The big picture
Demand for pharmaceuticals isn't going away anytime soon. A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.

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The Danger Lurking in Your Next Brokerage Statement

Most of our readers at the Motley Fool take more than a passing interest in their investments, keeping up to date on events hitting the financial markets. But for millions of Americans, the first clue of any signs of trouble in the markets will come shortly after the end of this month, as they get their quarterly brokerage and mutual fund account statements in the mail.

Inside those statements, there'll be some bad news for investors. But it won't come from the direction that most of them are expecting, especially if they've seen recent headlines about triple-digit moves in the stock market. Rather, what they'll see will convince them that they've once again been had, and they'll end up questioning their overall investment strategy as a result.

The big bad bond market
Investors have been taught that when they're scared of stocks, they should buy bonds. The reason to do so is that ordinarily, bonds are less volatile than stocks and less prone to see dramatic drops in value. As a result, if you're looking to reduce the overall ups and downs in your portfolio -- especially as you approach and reach retirement age -- then financial advisors will often point you toward buying bonds.

But these are anything but ordinary times. Massive bond purchases from the Federal Reserve at the rate of more than $1 trillion per year have arguably distorted the functioning of the bond market, and with the recent spike in bond yields after the Fed merely hinted at the eventuality of needing to reduce its purchasing program, evidence of that disruption appears clearer than ever.

Bond prices move in the opposite direction as yields. As a result, as you're opening your brokerage statements in early July, you can expect to see troubling results like these:

The biggest bond fund in the market, the PIMCO Total Return Fund (NASDAQMUTFUND: PTTRX  ) , is on track to lose almost 5% this quarter -- even taking the interest income that fund shareholders received into account. That comes despite the fund's emphasis on short-term bonds, which usually move less abruptly than longer-dated bonds, but the greater volatility reflects moves that the fund takes to boost its leverage. Index investors won't see much better results. Vanguard Total Bond Market Index Fund (NASDAQMUTFUND: VBTLX  ) is down almost 4%, with its greater emphasis on Treasuries helping to offset the somewhat heavy concentration on bonds with maturities of 20 years or longer. If you invest in some niche areas in bonds, expect a particularly harsh shock. iShares S&P National AMT-Free Muni Bond ETF (NYSEMKT: MUB  ) is down 8% so far this quarter, as tax-free bonds haven't been any haven from rising interest rates. International bond funds have gotten hit even harder, with PowerShares Emerging Markets Sovereign Debt (NYSEMKT: PCY  ) down 14% since the end of March as investors flee less-secure rising economies in favor of established markets.

In addition, even stocks geared at generating income haven't been immune. Mortgage-REIT Annaly Capital (NYSE: NLY  ) , once the go-to place for high-dividend yields and strong total returns, has plunged 20% since the beginning of April. A steepening yield curve might help mortgage REITs in the long run, but for now, the Fed's continuing purchases of mortgage-backed bonds hamper Annaly's ability to maximize its profits. More broadly, rising interest rates hurt a wide range of rate-sensitive stocks, and so you'll see many dividend-paying stocks having suffered somewhat deeper declines than the broader market.

What to expect
Unfortunately, even if you're smart enough not to panic-sell in the face of declines that have already occurred, many of the millions of people opening their brokerage statements to this nasty surprise won't be so disciplined. Therefore, you can expect further selling from emotion-driven investors, and smart buyers will likely wait until that selling pressure ends before jumping in to score bargain-basement bonds.

Don't be afraid of your brokerage statement, but don't ignore what it's telling you either. With many people getting their first taste of losses in a while, you need to prepare for what could become an even bumpier ride in the months to come.

The best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

Tune in every Monday and Wednesday for Dan's columns on retirement, investing, and personal finance. You can follow him on Twitter @DanCaplinger.