Regulatory And Case Law Developments Relating To Hedge Fund Subscription Materials

This alert highlights several recent regulatory and case law developments affecting hedge fund managers. The developments summarized below may require updates to investor subscription materials and should be incorporated into subscription materials for new hedge funds.

Proposed Changes to "Accredited Investor" Definition

Safe harbor rules provided by Regulation D under the Securities Act of 1933, as amended (the "Securities Act") allow private placement of interests in hedge funds to "accredited investors." The Securities and Exchange Commission (the "SEC") has proposed amendments to the "accredited investor" standards to reflect the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"). Under the current rules, with respect to a natural person, an accredited investor is "any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's