Publication

“SEC Adopts New Antifraud Rule to Protect Investors in Pooled Investment Vehicles”

On August 3, 2007, the Securities and Exchange Commission (the “SEC”) issued Release No. IA-26282, adopting new antifraud rule 206(4)-8 (the “Rule”) under the Investment Advisers Act of 1940, as amended (the “Advisers Act”).  The Rule was designed to clarify, in light of the recent opinion of the Court of Appeals for the D.C. Circuit in Goldstein v. SEC, the SEC’s authority under the Advisers Act to bring enforcement actions against investment advisers to pooled investment vehicles who defraud the underlying investors or prospective investors in the pool. 

This Stroock Special Bulletin examines the scope and applicability of the Rule and its potential implications for investment advisers to pooled investment vehicles.