The Jumpstart Our Business Startups Act (JOBS Act or Act), which was signed into law on April 5, 2012, could improve substantially the fundraising prospects for private funds. Elimination of the prohibition against general solicitation and general advertising will increase exposure for private funds and, consequently, the pool of prospective investors. Although the JOBS Act and rules to be adopted in connection with the Act will in some ways revolutionize private offerings, it is important for private funds to keep in mind the restrictions on U.S. private offerings that are unaffected by the JOBS Act.
General partners, managers and sponsors of private funds often struggle with the prohibition against general solicitation and general advertising as they raise new capital. Non-U.S. private funds, in particular, which may not be subject to similar restrictions under local law, must navigate gingerly around the cumbersome prohibitions. Those funds will enjoy benefits of relaxed offering rules, but should not forget the applicable restrictions that remain for private funds that offer interests in and into the United States.
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