U.S. Securities & Exchange Commission
SEC Seal
Home | Previous Page
U.S. Securities and Exchange Commission

SEC Votes to Propose Rule to Prohibit Fraud by Investment Advisers to Certain Pooled Investment Vehicles; Also Votes to Propose Revisions to Criteria for Accredited Investors in Certain Private Investment Vehicles


Washington, D.C., Dec. 13, 2006 — The Commission today voted to propose several new rules that are intended to provide additional protections to investors in hedge funds and other pooled investment vehicles.

The proposals include the following:

  • Antifraud Provision under the Investment Advisers Act of 1940. The proposal would make it a fraudulent, deceptive, or manipulative act, practice, or course of business for an investment adviser to a pooled investment vehicle to make false or misleading statements or to otherwise defraud investors or prospective investors in that pool. The rule would apply to all investment advisers to pooled investment vehicles, regardless of whether the adviser is registered under the Advisers Act. Under the proposed rule, a pooled investment vehicle would include any investment company and any company that would be an investment company but for the exclusions in sections 3(c)(1) or 3(c)(7) of the Investment Company Act.
  • Amendments to Private Offering Rules under the Securities Act of 1933. The proposals would define a new category of accredited investor that would apply to offers and sales of securities issued by hedge funds and other private investment pools to natural persons. The proposed definition would include any natural person who (a) meets either the net worth test or income test specified in rule 501(a) or rule 215, as applicable, and (b) owns at least $2.5 million in investments, as defined in the proposed rules.

Comments on these proposals should be received by the Commission within 60 days of their publication in the Federal Register.

* * *

The full text of the detailed release concerning these items will be posted to the SEC Web site as soon as possible.



Modified: 12/13/2006