Category Archives: Laws

Washington DC Hedge Fund Law

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Starting a hedge fund in the District of Columbia

In DC, things are starting to get back to normal post-election.  Hedge fund and investment managers who are located in DC, however, will generally need to be registered as investment advisors with the Department of Insurance, Securities and Banking (ISB).  I’ve reviewed the DC investment advisory rules and have found that they have the standard investment advisory definition and, generally, no exemption from the registration provisions for hedge fund managers.  This means that start up hedge fund managers with a place of business in DC will need to register as an investment advisor with the ISB.  The ISB website is fairly helpful and provides links to good information regarding registration.  I have posted one of these resources below, dealing wih the filing requirements for DC investment advisory registration.  Continue reading →

New York Hedge Fund Law

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Starting a Hedge Fund in New York

It is no secret that New York is the center of the investment management universe and the home of a large majority of hedge funds.  For both small and large managers New York offers many befits, namely a proximity to Wall Street and many of the investment banks and also an exemption from investment advisor registration (see discussion below).  This article discusses the New York investment advisor exemption, the Form 99 filings and New York investment advisor FAQs. Continue reading →

Nevada Hedge Fund Law

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Starting a Hedge Fund in Nevada

While Nevada may be the favorite place for hedge fund managers to spend their money, it is not necessarily a place where hedge fund managers want to be located.  The reason is that Nevada requires hedge fund managers with a place of business in Nevada to be registered as an investment advisor with Nevada.  If a start up hedge fund manager does not want to register as an investment advisor, they should not establish a place of business within Nevada. Continue reading →

IRC Subchapter K – Partners and Partnerships

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Below is Subchapter K of the Internal Revenue Code.  Most hedge funds are taxed as partnerships and we discuss some of these provisions from time to time on this website.  Please let us know if you have any questions on hedge fund tax or if you would like to start a hedge fund.  Continue reading →

New Mexico Hedge Fund Law

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Starting a hedge fund in New Mexico

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 →

Virginia Hedge Fund Law

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Starting a hedge fund in Virginia

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 →

North Carolina Hedge Fund Law

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Starting a hedge fund in North Carolina

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 →

Idaho Hedge Fund Law

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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 →

SEC Hedge Fund Registration Exemption – Section 203(b)(3) and Rule 203(b)(3)-1

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Exemption from the Registration Provisions of the Investment Advisors Act

We have discussed the SEC hedge fund registration exemption many times before, but we have not addressed it directly.For most management companies with a single hedge fund client, registration is actually a relatively easy and straightforward process.  Once hedge fund managers are registered as investment advisors with the SEC there are certain recordkeeping requirements for the hedge fund manager, but the requirements are not onerous (for more information, please see ).

Notwithstanding the above, many managers will choose to remain unregistered for a variety of different reasons and those managers will typically rely on the hedge fund registration exemption found in Section 203(b)(3) of the Investment Advisors Act of 1940.  The exemption and the rule underlying the exemption is detailed in full below. Continue reading →

Illinois Hedge Fund Law – Various Laws and Regulations

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Perhaps not surprising, Illinois has a very well developed Securities Division website which provides its investment advisors (and potential investment advisors) with many informative articles.  In this article we have reprinted three separate resources which we found helpful for potential hedge fund managers located in Illinois.

The first resource provides a basic overview of investment advisors and the separation of regulatory jurisdiction between the federal government and the states.  This resource is glib on whether hedge fund managers in Illinois need to register as investment advisors with the state – generally they do not.  For those managers which are registered with Illinois, the second resource provides an overview of the potential for on-site examinations of the manager’s business.  The final resource provides an overview of the different fees which an advisor registered (or notice filed) in Illinois will need to pay. Continue reading →