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June 21, 2001 The FTC has orally taken the position that a hedge fund that is not registered with the CFTC or the SEC is a financial institution under the Gramm-Leach-Bliley and the FTC privacy rules and therefore must deliver a privacy notice to holders of its interests (e.g., limited partners). A hedge fund that is registered with the CFTC as a commodity pool operator or commodity trading adviser would be subject to the CFTC's privacy rules, which do not require privacy notices to be sent until March 31, 2001. An SEC registered-adviser is required by Regulation S-P to send a privacy policy to its natural person clients. Since a hedge fund is not a natural person, the SEC has taken the position that Regulation S-P does not require an adviser to send a privacy notice to holders of interests in hedge funds that it manages. As noted, however, the FTC would require the hedge fund itself to send a privacy notice to each of its natural person interest holders.
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