Limits on Cash Solicitation Rule: SEC Staff Clarifies Guidance Regarding Applicability of Rule to Investment Pool Referrals

September 11, 2008
SEC staff recently confirmed that Rule 206(4)-3 under the Investment Advisers Act does not apply to a registered investment adviser’s cash payments to a person soliciting investors solely to invest in an investment pool managed by the investment adviser, such as hedge funds and private equity funds.  This update describes the staff’s actions and certain conditions and other considerations concerning the action.