Many hedge funds have been reluctant to use general solicitation to offer securities because of the possibility it would be inconsistent from exemptions related to CPO (commodity pool operator) regulations administered by the CFTC.  More specifically:

• CFTC Regulation 4.7 provides relief from certain disclosure, periodic and annual reporting, and recordkeeping requirements. Regulation 4.7(b) provides a CPO may claim exemptive relief if it is a registered CPO who offers or sells participations in a pool solely to qualified eligible persons in an offering which qualifies for exemption from the registration requirements of the Securities Act pursuant to Securities Act section 4(2) (now section 4(a)(2), as amended by the JOBS Act) or pursuant to Regulation S.
• CFTC Regulation 4.13(a)(3) provides a registration exemption for CPOs who operate pools meeting the conditions enumerated in the regulation, including interests in each pool for which the CPO claims the exemption be exempt from registration under the 33 Act and offered and sold without marketing to the public in the United States.

Obviously, hedge fund sponsors were concerned that use of general solicitation to place securities would be inconsistent with the requirement to comply with the Section 4(a)(2) exemption or the CFTC restriction on marketing to the public.

In a no-action letter the CFTC confirmed its view that the  use of general solicitation would not permit reliance on the foregoing exemptions but then granted no-action relief that permits the use of general solicitation if the conditions of the no action letter are complied with.  The conditions are:

• The issuer musty comply with the requirements of Rule 506(c) regarding general solicitation or resellers must comply with related Rule 144A requirements.
• The relief is not self-executing. A notice filing must be made with the CFTC that contains the information specified in the no-action letter and is filed in the manner specified.