Lock-up provisions restrict an investor’s ability to withdraw capital from a hedge fund for some stated period of time. Traditionally, it was common for hedge funds to lock-up an investor’s contribution for one or two years. In the wake of the recent financial crisis, lock-up provisions received considerable negative publicity as investors attempted to withdraw funds to meet liquidity needs, and were unable to do so. As such, many hedge funds launched since have determined not to include a lock-up on investor capital. These funds will generally restrict liquidity in other ways, by decreasing the frequency of periodic withdrawal dates and increasing notice periods to effect a withdrawal, for example. Despite the negative association of lock-up provisions, lock-ups are still relatively common and are often important for funds that trade illiquid assets.
Can a hedge fund advertise on the Internet?
Historically, hedge funds have been prohibited from conducting any public offering by Rule 502(c) of Regulation D, which prohibited all forms of general solicitation and advertising. However, the JOBS Act…
Does a hedge fund need to register with any regulator?
Hedge fund managers are often regulated by the state in which the hedge fund manager conducts business or by the SEC, depending on the manager’s assets under management (known as…
What documents do I need to start a hedge fund?
Most hedge funds raise money through a private offering exemption under Regulation D of the Securities Act of 1933. Although Reg. D prohibits general advertising, fund managers do distribute certain…