A pre-existing substantive relationship must exist between the hedge fund manager and the prospective investor prior to any solicitation to invest in the hedge fund. Once a pre-existing relationship exists between a prospective investor and the hedge fund manager, the manager may send a confidential private placement memorandum to such investor. Federal and state securities laws generally require that a placement memorandum be delivered to all non-accredited investors. In order to reduce liability, however, the manager, including any agents acting on its behalf, should provide all prospective investors with the most recent copy of the confidential private placement memorandum when soliciting an investment in the hedge fund.
HEDGE FUND WORLD