Advisors highlight AIFMD marketing pitfalls

A simple telephone call or email to an EU investor could land the firm in hot water, warn legal sources.

Legal advisors are warning fund advisors not authorized under the Alternative Investment Fund Managers Directive (AIFMD) to be aware of the European law’s global implications.

Something as simple as a telephone call or email made to an investor in the EU could potentially violate the directive, warned Sally Gibson, international counsel at Debevoise & Plimpton, speaking at an industry conference in London this week.

Accordingly, GPs should review their internal marketing policies and procedures to ensure compliance with the directive, even if Europe is not a significant part of the firm’s fundraising strategy, legal advisors said at the conference, hosted by Jersey Finance.

Moreover staff should be trained on AIFMD compliance, said at the conference Gibson, who added the directive does not shut out non-authorized GPs from soliciting EU investors once the directive comes into force on July 22.

“GPs are spending more money on legal advice to understand how to market to investors using the more complicated European private placement regimes.”

The introduction of AIFMD has caused individual EU states to examine their existing private placement regimes, which non-EU managers must continue using until at least 2015.

As a result, some EU states have tightened their private placement rules to match certain elements of the AIFMD – or even go beyond it, which is being described as “gold plating” the directive in industry circles.