On Feb. 12, 2007, the Staff of the Division of Investment Management of the U.S. Securities and Exchange Commission (“SEC”) issued a No-Action Letter, Heitman Capital Management, LLC (Feb. 12, 2007), in which the Staff provided guidance to registered investment advisors regarding the use of hedge clauses in investment advisory agreements (the “Heitman No-Action Letter”).  The Staff’s conclusion that the use of hedge clauses would not be a per se violation of the anti-fraud provisions of Section 206 of the Investment Advisers Act of 1940 (“Advisers Act”) updates prior SEC Staff guidance on the use of hedge clauses.

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