The offer and sale of securities within the United States is subject to concurrent federal and state regulation. In order to avoid the registration of securities offered to investors (e.g. interests in a domestic limited partnership or shares in an offshore corporation), the securities of hedge funds, domestic and offshore, are typically offered under the private placement “safe harbor” provisions of Regulation D or the safe harbor for offerings outside the United States pursuant to Regulation S of the Securities Act of 1933. Additionally, most states require some kind of notice filings and fees before investors may be solicited, or at the time they invest in a fund.
A hedge fund manager and any person acting on its behalf may not solicit an investment in the fund by any form of “general solicitation” or “general advertising.” This includes any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, and any seminar or meeting whose attendees have been invited by any general solicitation or general advertising.
In the case of any relationship established as a result of a general solicitation or advertisement, a sufficient time must elapse between the establishment of the relationship and the investment in the hedge fund so that the offer will not be interpreted as being made via a general solicitation or advertising.