Petition to SEC for Rulemaking on Rule 502 of Regulation D, Ban General Solicitation

January 06, 2012

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Topics: Petition for Rulemaking Securities and Exchange Commission, SEC, Offers or Sales Securities, Private Funds Managers, Economic Growth, Competitiveness, Job Creation, Independent Regulatory Agencies, Investor Protections, Offerings or Sales, private funds, Administrative Costs, sophisticated investors, House of Representatives, United States Congress, Ban on General Solicitation and Advertising, Senate, Public Offering, investment company, Interpretive Framework, Broadcast Over Television, Radio, Fund Managers, Issuer, Selling Agent, Pre-Existing Substantive Relationship, Continuous Offerings, Limited Partnerships, Broker, accredited investors, Pre-Existing Relationship Doctrine, Qualified Potential Investors, Industry Conferences, Inquiries, Legal Costs, Business Practices, transparency, hedge funds, Policy Makers, Regulators, Proprietary Investment Data, Systemic Risk Assessment, Over-the-Counter Derivatives Markets, Disclosure, Third-Party, oversight, Private Offering, prime brokers, Auditors, General Solicitation, General Advertising, Fraud, Unsophisticated Investors, Ban on General Solicitation, Protecting Investors: A Half Century of Investment Company Regulation, Division of Investment Management, Investor Criteria, qualified purchasers, Division of Corporation Finance, Anti-Fraud Provisions, Wealth Tests, Federal Securities Laws, Chairman Schapiro, Congressman Darrell Issa, House Committee on Oversight and Government Reform, Investor Protection, capital formation, Inadvertent Violation, Waiting Period, Consulting Firm, Subscription Agreement,
From: MFA, Richard Baker


Elizabeth Murphy, SEC
Mary Schapiro, Elisse Walter, Luis Aguilar, Daniel Gallagher, Troy Paredes, Meredith Cross, Eileen Rominger (all) SEC.

MFA submitted a comment letter to the SEC requesting that the Commission amend Rule 502(c) of Regulation D to eliminate the prohibition on offers or sales securities by general solicitation or general advertising with respect to private funds. In the letter, we explained that eliminating the prohibition would:

  1.  reduce the legal uncertainty resulting from the current regulation of private fund offerings conducted in reliance on Regulation D;
  2. increase transparency of the hedge fund industry in a manner consistent with the Dodd-Frank Act and recent regulatory initiatives;
  3. facilitate capital formation and reduce administrative costs by allowing investors to more easily obtain information about private funds;
  4. maintain strong investor protections and ensure that only sophisticated investors are able to purchase interests in private funds; and
  5. reduce regulatory oversight costs and allow the SEC staff to reallocate resources to other aspects of investor protection, including products offered and sold to retail investors.