Over the past few weeks, we’ve shared several updates about the evolving regulatory landscape around fund marketing, particularly the SEC’s recent no-action letter on Rule 506(c) and its updated guidance on performance presentation under the Marketing Rule FAQs. We’ve received significant interest and questions from fund managers, so we’re consolidating the key takeaways here. This post outlines what has changed, what it means for GPs, and how AnchorPoint can support more effective and compliant marketing efforts.

The SEC’s recent no-action letter has made Rule 506(c) a more attractive alternative to Rule 506(b). While 506(c) has always been available, many fund managers have preferred 506(b) due to the burdensome investor verification requirements. The recent no-action letter has eased compliance by providing limited flexibility in accredited investor verification, particularly when a minimum investment threshold is met. This change makes it easier for investor relations teams to actively market their funds and allows emerging fund managers to reach a broader audience without relying on costly placement agents. However, just because fund managers can market their funds more freely doesn’t mean they can do so without restrictions. While Rule 506(c) provides more flexibility in how fund managers solicit investors, they must still adhere to SEC regulations to remain compliant.

In a challenging fundraising environment, closing a private equity (PE) fund efficiently requires strategic incentives, clear deadlines, and strong investor communication. From what we have witnessed, the most savvy fund managers, i.e., those who have closed funds in record time, consistently implement certain key strategies to maintain momentum and avoid unnecessary delays. Given the current market slowdown, we believe it is especially useful to share these insights we have experienced from savvy fund managers.

Starting a fund is a bold and exciting endeavor, but one of the critical challenges many aspiring fund managers face is leveraging their track record from a current or one or more previous employers. A track record is more than just a list of past achievements; it is a vital tool for attracting investors and establishing credibility. Given the recent challenges in fundraising where most of the capital is going to established players in the industry, a strong track record can be the deciding factor in successfully raising capital.

Hypothetical performance can be a powerful tool in fund marketing, offering investors a glimpse into how a strategy might perform under specific scenarios. However, the use of hypothetical performance data is heavily scrutinized by regulators, particularly the SEC, to prevent misleading claims and ensure investor protection. In this post, we’ll explore what constitutes hypothetical performance, the rules governing its use, and best practices for compliance.

Private investment funds in the United States often rely on exemptions under the Investment Company Act of 1940 to avoid registering as investment companies with the Securities and Exchange Commission (SEC). Two common exemptions are provided under Sections 3(c)(1) and 3(c)(7). While both allow funds to operate with fewer regulatory burdens, there are significant differences between these two structures. Understanding these differences is critical for both investors and fund managers.