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

January 06, 2012

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