New opportunities to market investment funds in the USA
| Date | 01 January 1998 |
| Pages | 46-58 |
| Published date | 01 January 1998 |
| DOI | https://doi.org/10.1108/eb024956 |
| Author | Marybeth Sorady |
| Subject Matter | Accounting & finance |
Journal of Financial Regulation and Compliance Volume 6 Number 1
New opportunities to market investment
funds in the USA
Marybeth Sorady
Received: 10th October, 1997
Price Waterhouse LLP, 1301 K Street, NW 800W, Washington DC 20005-3333; tel: 202 414 4352; fax:
202 414 4313.
Marybeth Sorady is a Managing Director
in the Regulatory Compliance Consulting
Group at Price Waterhouse LLP. She pro-
vides consulting services with emphasis
on investment advisers, broker-dealers,
registered investment companies and
unregistered pooled investment funds.
Such services include advice and analysis
concerning, and preparation of policies
and procedures for, such financial services
entities. Ms Sorady was engaged in the
practice of law for 15 years prior to joining
Price Waterhouse LLP, specialising in
cor-
porate and financial services matters.
ABSTRACT
For the sponsor or manager of a non-US
investment
fund,
the mantle of US laws and
regulations surrounding the offering of fund
shares
to US investors can be mystifying. In an
effort to simplify and clarify the legal miasma,
the US Congress and Securities and Exchange
Commission (SEC) have in the past year
taken action
to
facilitate the offering of
interests
to more sophisticated investors in both foreign
and domestic private investment funds. This
paper
describes
the recent legislation enacted by
Congress, rules and interpretations issued by
the SEC and its staff
to
implement and effectu-
ate the legislation and
strategies
for privately
offered investment companies to take advantage
of the new, more
liberal
regulatory scheme.
INTRODUCTION
The offering in the US of interests in a
non-US investment fund potentially sub-
jects the fund and/or its manager to regula-
tion under the following schemes:
— regulation of the offering: the US Secu-
rities Act of 1933 (the Securities Act)1
provides that every offer or sale of
securities in the USA must undergo the
costly and cumbersome process of
registration with the Securities and
Exchange Commission (SEC), absent
an available exemption. Recent inter-
pretations by the SEC staff have facili-
tated the offering of interests under the
most frequently used of such exemp-
tions,
Rule 506 of Regulation D
— regulation of the investment company:
in addition to regulation of the offer
and sale of shares in the investment
company, under the US Investment
Company Act of 1940 (the Investment
Company Act),2 every public US
investment company is itself subject to
registration and direct, continuous
regulation of all aspects of its corporate
governance and business. Non-US
investment companies are prohibited
from offering shares publicly in the US
unless they obtain an exemption from
the prohibition by agreeing in effect to
Journal of Financial Regulations
and Compliance, Vol. 6, No. 1,
1998,
pp. 46-58
© Henry Stewart Publications.
1358-1988
Page 46
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