US: Funds made easier
With the paring down of Chapter 15 of the US listing rules, the establishment of the specialist fund market and the existence of Euronext, the Alternative Investment Market, and Plus Quoted, there are many choices available for listing closed-ended investment entities. Funds taking advantage of these choices and also wishing to tap the US capital markets can be structured so as to avoid the burden of layers of US regulation. The first such layer is registration of a fund offering under the US Securities Act of 1933 as amended. To avoid this, a fund typically relies on the exemption from registration available under Section 4(2) of the US Securities Act for transactions by an issuer not involving a public offering. Since the definition of a public offering is illusive, hedge funds typically take refuge in the safe harbour of Rule 506 of Regulation D under the Securities Act which ensures that an issuer, such as a fund, will not be deemed to be involved in a public offering if the fund:
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