"The New Section 4(a)(7) Exemption for Private Resales of Securities: What Does it Mean for Hedge Funds?" by Scott Budlong

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December 21, 2015

The FAST Act, signed into law on December 4, 2015, contains an amendment to the Securities Act of 1933 that establishes a new registration exemption for private resales of securities. The exemption is embodied in new §4(a)(7) of the Securities Act and is largely based on the so-called “Section 4(a)(1-½) exemption” that securities lawyers have developed over time under the SEC’s eye.

In some situations, the new exemption may provide modest liquidity improvements for hedge funds that wish to resell restricted and/or control securities.

In this memorandum, RK&O partner Scott C. Budlong summarizes the different aspects of new §4(a)(7), compares it to the traditional §4(a)(1-½) approach, and discusses what the new exemption could mean for hedge funds.

Please click here to read the memorandum.