Section 911 of the Dodd-Frank Act established the Investor Advisory Committee (IAC) to advise the SEC on regulatory priorities, investment management regulation, trading strategies, fee structures
, disclosure effectiveness, investor protection and market integrity. The IAC consists of representatives of institutional investors, hedge fund managers, industry groups and other investor constituencies. See “Operational Due Diligence from the Hedge Fund Investor Perspective: Deal Breakers, Liquidity, Valuation, Consultants and On-Site Visits
,” Hedge Fund Law Report, Vol. 7, No. 16 (Apr. 25, 2014). The IAC commenced operations in 2009, and in the intervening years has tackled issues including general solicitation
, fiduciary duty
and legislation to fund investment adviser examinations
. On the IAC’s efforts with respect to fiduciary duty, see “For Hedge Fund Managers, How Would a Statutory Definition of ‘Fiduciary Duty’ Affect the Scope of the Duty and the Standard for Breach?
,” Hedge Fund Law Report, Vol. 2, No. 34 (Aug. 27, 2009). Most recently, the IAC made five recommendations for revising the definition of “accredited investor” as it relates to natural persons that invest in private offerings, including private offerings of interests in hedge funds. See “Best Practices for Ensuring That Only Accredited Investors Participate in Publicly Advertised Private Offerings by Hedge Funds (Part Two of Three)
,” Hedge Fund Law Report, Vol. 7, No. 39 (Oct. 17, 2014). While the hedge fund investor base is increasingly institutional, natural persons continue to comprise an important source of capital, especially for startup or early-stage managers. For more on fundraising for start-up managers, see “Sidley Partners Discuss Trends in Hedge Fund Seed Deals, Governance, Succession, Estate Planning and Tax Structuring (Part Two of Two)
,” Hedge Fund Law Report, Vol. 7, No. 37 (Oct. 2, 2014). This article provides a detailed discussion of those five recommendations and includes insight from Skadden partner Anastasia T. Rockas and Shipman & Goodwin partner Peter J. Bilfield on what the recommendations portend for marketing of hedge funds to natural persons.