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Congress has recently approved, and President Obama is expected shortly to sign into law, the Jumpstart Our Business Startups Act (the “JOBS Act”). While the JOBS Act touches on many areas of capital formation that will likely be of interest to managers, sponsors, and marketers of private investment funds, two changes are particularly relevant to participants in this sector:

• Amending Rule 506 to provide that a private placement otherwise complying with that rule shall not be deemed to be a public offering requiring registration under the Securities Act of 1933 solely as a result of general solicitation or general advertising
• Amending Section 12(g)(1)(A) of the Securities Exchange Act of 1934 to increase the number of holders of record that will trigger the requirement that private investment funds register their securities, from 500 persons to 2,000 persons (provided that the number of non-accredited investors does not exceed 499).

Partners Bertrand Fry and Jonathan Shepard, Co-Chairs of Pryor Cashman’s Investment Management Group, together with associate Jill Braibanti, have written a Legal Update giving an overview of these aspects of the JOBS Act and their anticipated impact on the marketing of private investment funds. To read the update, entitled JOBS Act Lifts the General Solicitation Prohibition and Increases the Record Holder Threshold for Private Investment Funds, please click here.