Alternative Asset Fund Placements

Definition

An alternative asset fund placement is the sale of interests in a private fund investing in assets such as private equity, private credit, real estate or infrastructure, usually made without SEC registration under the exemption for transactions not involving any public offering.^[1] Most such placements rely on Rule 506 of Regulation D^[3], which Congress directed the SEC to open to general solicitation when every purchaser is an accredited investor and the issuer takes reasonable steps to verify that status.^[2]

Federal law

A market and contract term. No Act of Congress defines it; the federal laws below apply as described.

1. Securities Act of 1933, Act of May 27, 1933, ch. 38, title I, § 4(1), 48 Stat. 74, 77. Securities Act of 1933: private offering exemption for transactions by an issuer not involving any public offering (now § 4(a)(2), 15 U.S.C. § 77d(a)(2)). Official text: govinfo.gov, U.S. Government Publishing Office.
2. Jumpstart Our Business Startups Act, Pub. L. 112-106, § 201, 126 Stat. 313. Directed the SEC to permit general solicitation in Rule 506 offerings sold only to accredited investors, with reasonable verification steps, and added Securities Act § 4(b). Official text: govinfo.gov, U.S. Government Publishing Office.

Federal regulations

Rules issued by federal agencies under the laws above.

3. Exemption for limited offers and sales without regard to dollar amount of offering (Rule 506), 17 CFR 230.506 (Securities and Exchange Commission). SEC Rule 506: offers and sales meeting its conditions are deemed transactions not involving any public offering; paragraph (c) permits general solicitation with accredited-investor verification. Official text: govinfo.gov, U.S. Government Publishing Office.