Questions and discussions from Hedge Fund Law Blog readers
I get quite a few questions from readers and usually I am able to answer these questions via email within a couple of days. If you have any questions, comments or simply want more information on starting a hedge fund, please feel free to contact us. We also will take requests for blog posts on certain issues and we also will publish articles (with all appropriate recognition and links) by guest authors. [Note: any grammatical errors in the original messages have not been corrected.] Continue reading →
Hedge fund managers who reside in New Mexico will be deemed to be investment advisors under New Mexico’s securities act and, unfortunately, there is no exemption available from the registration provisions of the act. This means that before a manager establishes a fund based in New Mexico, he will need to become registered as an investment advisor.
The people at the New Mexico Securities Division are fairly knowledgable and have been very helpful in the conversations we’ve had with them. However, they have a horrible securities division webpage. The webpage has very little useful information save for the links to the New Mexico laws (which are hard to navigate through). I have posted below a list of the fees which are applicable to a hedge fund manager establishing a business in New Mexico. Continue reading →
Those hedge fund managers who are starting a hedge fund in Virginia can potentially fit within an exemption from the Virginia investment advisor registration rules. Like many states which follow the Uniform Securities Act, investment advisors with a place of business in Virginia must register with the securities division (see FAQs below on Virginia investment advisor registration).
However, managers who have funds which start out with more than $5 million in assets, and which are exempt from investment advisor registration with the SEC, may be able to fit within an exclusion from the definition of the term investment advisor and thus not required to be registered with Virginia. We provide the statute and analysis below. Continue reading →
One of the more unusual requests (in my opinion) that we receive on this site is how to write a hedge fund disclaimer. I think that this is unusual because I would assume that most hedge fund managers would want to make sure that anything with a disclaimer has been reviewed and approved by a hedge fund attorney. If you are a manager who is looking for an “off the shelf” disclaimer, I recommend that you speak with a hedge fund attorney instead. Any hedge fund marketing or promotional materials (including hedge fund websites) should be reviewed by an attorney prior to publishing or dissemination. Continue reading →
Many potential hedge fund investors come to this website for information on how to invest in a hedge fund. While there are many headlines and resources for hedge fund managers, there are fewer resources out there for hedge fund investors. This article will provide an overview of how to go about investing in a hedge fund. Continue reading →
The North Carolina Securities Division has a very good website which provides great information for managers based in North Carolina. Unlike many securities divisions, it informs the public when new securities rules are proposed and provides links to the proposed rules. The site also has a very good FAQ section for start up hedge fund managers in North Carolina. We’ve posted the FAQ section below for your information. If you have any questions starting a hedge fund in North Carolina, please contact us discuss with a hedge fund attorney. Other related hedge fund law articles include: Continue reading →
For the new year we will publish a list of common questions we receive from our readers. This question involves hedge fund valuation.
Question: Can a hedge fund provide its own valuation?
Answer: Generally yes, provided that the hedge fund offering documents state that the valuation of the hedge fund’s assets will be conducted by the fund – more specifically by the hedge fund’s management company. In many hedge fund documents a provision which allows a manager flexibility in valuation is standard – although, it is likely that these normally nebulous provisions will become more specific as institutional investors require greater specificity in the offering documents. Continue reading →
The Madoff scandal, which caught the SEC and savy institutional investors flat-footed, is increasing the pressure for more oversight and regulation within investment management and hedge fund industries. It is expected that Congress will be busy with this and other matters regarding regulation of the capital markets. In fact, Senator Chuck Grassley from Iowa recently announced his intention to require hedge fund registration at the SEC level.
In addition to Grassley, two more members of Congress are calling on greater oversight in the wake of the Madoff scandal. Specifically Congressman Paul E. Kanjorski from Pennsylvania and Congressman Spencer Bachus from Alabama are calling on the House Financial Services Committee to hold hearings on the Madoff scanal. I have reprinted the two notices below. We will continue to provide information on possible hedge fund registration as it comes forward. Related hedge fund law and registration articles include: Continue reading →
Idaho has another well run securities division and their website is particularly helpful. The information below comes from their website and describes the major laws that hedge fund managers in Idaho need to be concerned about. The information is applicable to traditional securities-only hedge fund managers (with regard to investment advisor registration) and also to forex hedge fund managers. Like many states Iowa has enacted a commodity code which may apply to forex managers depending on the nature of the manager’s forex program. Continue reading →
Many future hedge fund managers have misconceptions about how to start a hedge fund – either they think it is a very basic process that takes no time or resources, or they think that it will take too much time and will be cost prohibitive. For most start up hedge funds, the manager can be up and running within a month depending on whether the manager will need to be registered with the state securities commission (please see our article on start up hedge fund timelines). This article will detail the steps the manager will need to take to start the hedge fund. Continue reading →