The SEC's New Anti-Fraud Rule For Private Funds

Law360, New York (October 17, 2007, 12:00 AM EDT) -- The SEC has adopted a new anti-fraud rule directed primarily at advisers of private investment funds. The impetus for the new rule was the June 2006 decision of the U.S. Court of Appeals for the District of Columbia (the “Goldstein decision”) striking down Rule 203(b)(3)-2 under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), which required many hedge fund managers to register with the SEC as investment advisers.

The new rule, which was adopted in the same form as originally proposed, was effective...
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