More modern regulation

Author: | Published: 1 Dec 2007

The US Securities and Exchange Commission has increased its oversight of pooled investment vehicles, including hedge funds. Under the Investment Advisers Act of 1940, as amended, it has recently adopted a rule that prohibits investment advisers from defrauding investors and potential investors (August 3 2007). Second, the Commission proposed a revised definition of the term "accredited investor" to reflect changes in the private-offering marketplace (December 27 2006). Third, the Commission proposed to ease the threshold determination for issuers of private offerings by creating the new investor category of "large accredited investor" (August 3 2007). These regulatory developments may affect registered and unregistered funds and their advisers.

Section 203(b)(3) of the Advisers Act provides that hedge-fund advisers with fewer than 15 clients need not register with the Commission. Generally, a single hedge fund counts as one client of the adviser, although the fund may consist of many investors and hundreds of...