kaal:claim:2714974-020

The investor verification requirement defeats the purpose of the Rule 506(c) liberalization: fearing liability for investor misrepresentations of personal wealth, most hedge funds raising money from individuals continue to use old Rule 506 rather than Rule 506(c).

Fearing possible liability for investor misrepresentations of their personal wealth, most hedge funds that raise money from individuals continue to use the old Rule 506 rather than Rule 506(c).

Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016), Hedge Funds Can Advertise Generally, p. 18
https://ssrn.com/abstract=2714974 · source PDF

Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974

• applies to funds raising capital from individual investors

failuresupport: arguedfailure: Verification liability chills use of Rule 506(c)family: compliance-cost-and-barrier-to-entrylaw-and-legal-systemsrisk-and-incentives

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