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Alternative Market Briefing

US JOBS Act impacts on hedge fund and other alternatives offerings

Thursday, April 12, 2012

Beverly Chandler, Opalesque London: Law firm Dechert’s Financial Services Group has commented on the practical implications for offerings of hedge funds and private equity funds since President Obama signed into law the Jumpstart Our Business Startups Act, JOBS Act, on April 5th 2012.

In their Legal Update, Dechert found that the amendments to the Securities Act and the required revisions to Rule 506, contained in or directed by the JOBS Act, should allow sponsors of a private fund to reach out to potential investors through general solicitations and advertising without jeopardizing the fund’s ability to rely on Sections 3(c)(1) or 3(c)(7) of the Investment Company Act and Rule 506 of Regulation D as a safe harbor under Section 4(2) of the Securities Act, respectively, to avoid registration of the fund and its securities.

However, the firm says that until the amendments to Rule 506 are finalized following SEC rulemaking, private fund sponsors and placement agents should continue to follow their current practices, policies and procedures for their private offerings.

Dechert says: "In addition, it should be noted that, since the JOBS Act does not state that Section 4(2) itself is amended by the JOBS Act, issuers relying on the provisi......................

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