Solicitation Guidance for Hedge Fund Advisers May be Forthcoming
You may have heard that staff from the SEC’s Northeast Regional Office, during remarks at a June CCOutreach event, announced that the staff will no longer cite SEC-registered advisers for failing to enforce the application of the cash solicitation rule to individuals or firms that refer investors for their hedge funds.
Following that announcement, memos were written and phone calls were made. And yes, the staff confirmed, advisers do not need to comply with Rule 206(4)-3 if they are using solicitors to seek investors for their hedge fund (although such arrangements may still be subject to various disclosure requirements).
In any event, there is a movement afoot to seek more formal guidance on this matter from the SEC staff. There is no indication that the staff’s previously-expressed position has changed; rather, there seems to be a desire to see that guidance in writing, perhaps in the form of a no-action letter.