In Letter to SEC, Global Hedge Fund Group Lauds JOBS Act Regulaton D Changes

In a letter to the SEC, a global hedge fund association praised the JOBS Act elimination of the Regulation D prohibition on general solicitation and advertising for issuers raising capital from accredited investors and qualified institutional buyers, as long as all purchasers are accredited investors. Noting that the EU and Hong Kong allow general solicitation and advertising, the Alternative Investment Management Association urged the SEC to ensure that regulations implementing the Regulation D changes are consistent cross-border.

The Alternative Investment Fund Managers Directive regulates the marketing of alternative investment funds within the EU.  According to the AIFMD, authorised EU alternative investment fund managers have a passport to market EU AIFs to professional investors in the EU member states.  Marketing is defined as any offering and placement at the initiative of the AIFM or on behalf of the hedge fund manager of the units or shares of the managed fund to EU investors. The AIFMD does not further specify what forms such marketing may take and it does not include prohibitions on advertisement or general solicitation. Fund managers must, where relevant, establish arrangements to prevent hedge funds from being marketed to retail investors.

In Hong Kong, hedge funds authorized for distribution to the retail public can be advertised and marketed to the public subject to a minimum initial subscription of USD 50 000 (or the currency equivalent), or for funds of hedge funds USD 10 000 (or the currency equivalent).