Private Fund Securities Law Exemptions: Accredited Investors, Qualified Purchasers, Subscription Limits, and More

Description

When forming and operating private equity, venture capital, or hedge funds, fund managers and their counsel must navigate a maze of regulations under the Securities Act, the Exchange Act, the Investment Company Act, and the Investment Advisers Act.

Funds seeking an exemption from registration requirements of the Securities Act must have a keen understanding of who are accredited investors, as well as the general solicitation and advertising rules under Reg D. Exemption from broker-dealer registration is critical for partners and employees of private funds. Funds seeking an exemption from the disclosure and reporting obligations under the Exchange Act must pay particular attention to the 2000 investor limit, particularly concerning master-feeder structures and parallel fund structures.

Certain exemptions from the Investment Company Act require funds to either limit their number of investors to 100 or exceed that number only if the fund is owned by "qualified purchasers." Fund managers that choose to register as investment advisers under the Investment Advisers Act must limit their investors to "qualified clients." The two exemptions advisers can use to obtain exempt reporting status are the private fund adviser exemption and the venture capital fund adviser exemption.

The SEC's recently proposed amendments to the definition of "accredited investor" and "qualified institutional buyer" should have the effect of expanding access to private securities markets, which are now larger than public markets.

Listen as our authoritative panel of finance counsel discusses registration exemptions available to investment funds under the Investment Adviser Act, Securities Act, Exchange Act, and Investment Company Act. The panel will cover the pros and cons of seeking exemption from registration under these Acts and proposed legislative changes under the new administration.