News

Reverse solicitation as a sales practice is under increasing scrutiny by country regulators and the European Securities and Markets Authority (ESMA).

ESMA has conducted surveys of National Competent Authorities (NCAs) about their knowledge of the prevalence and use of reverse solicitation by Alternative Investment Fund Managers (AIFM)s and Asset Managers. Many NCAs suspect that reverse solicitation is being ‘over-used’ (abused) as a sales practice to circumvent EU Directives for the promotion of funds in the EU, especially in light of Brexit. This article will focus on the use of reverse solicitation for Alternative Investment Funds (AIFs).

So reverse solicitation as a sales practice is in the regulator’s crosshairs.

While the Principality of Monaco is a third country with respect to the European Union (EU), it is still an important example of how reverse solicitation, which was a previously ‘tolerated sales practice’ with investors in Monaco, is now prohibited and how the Monaco Regulator, the Commission de Contrôle des Activités Financières (Financial Activities Supervisory Commission) (CCAF) has addressed reverse solicitation through legislation.

In this article, we analyse Monaco as our reverse solicitation case study for legal & compliance insight into reverse solicitation. The Monaco legal perspective is provided by expert Monaco Counsel Geoffroy Michaux, and marketing compliance commentary is from Global Sales Compliance Ltd.®, cross-border marketing compliance consultants.