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SEC Adopts Antifraud Rule Applicable to Advisers of Pooled Investment Vehicles, Including Hedge Fund and Private Equity Fund Advisers

July 24, 2007

By The Investment Management Practice Group

The Securities and Exchange Commission (SEC) has adopted new rule 206(4)-8 which prohibits fraudulent and deceptive practices by investment advisers (whether registered or unregistered) to many types of pooled investment vehicles. The SEC proposed this new antifraud rule as a direct result of the D.C. Circuit Courts decision in Goldstein v. Securities and Exchange Commission, which invalidated rule 203(b)(3)-1, the hedge fund adviser registration rule.