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...