Georgia Hedge Fund Managers Generally Exempt From Registration
Below we have provided two separate sources from Georgia’s Securities Division Website. First, we have reproduced their frequently asked questions on investment advisor registration. Specifically it should be noted that Geogia based hedge fund managers do not generally need to register as investment advisors with the state of Georgia if they only manage one fund. While managers are not required to be registered, they still will need to make sure that they follow all necessary compliance rules which the hedge fund lawyer can remind them of.
Second, we have posted an interesting requirement for registered securities representatives (including investment advisor representatives) who live in Georgia. Such representatives need to submit to a criminal background check to the Georgia Securities Division by submitting their fingerprints. The fingerprints will be run through by the Georgia Bureau of Investigation as well as the FBI. While it will take a while for the final fingerprint check to be completed by the FBI, the Division will usually grant preliminary registration status once the fingerprints have passed the GBI check.
Please contact us if you have any questions on Georgia investment advisor registration or if you would like to start a hedge fund in Georgia. The discussion above is general in nature, please review our disclaimer. As always, the facts of your particular situation may be such that the general information posted above is inapplicable. A potential hedge fund manager should always discuss the facts of their particular situation with their hedge fund attorney. Other related hedge fund law articles include:
- Florida Hedge Fund Laws
- Colorado Hedge Fund Laws
- Oregon Hedge Fund Laws
- Overview of Hedge Fund Investment Advisors
- Hedge Fund Managers
- How to register as an Investment Advisor
- Important Information for Registered Investment Advisors
Frequently Asked Questions
1. As an investment adviser or federal covered adviser, do I have to register or notice file electronically?
Yes. Please see Georgia Regulation 590-4-8-.01.
2. As an investment adviser or federal covered adviser, do all my investment adviser representatives have to register?
It depends upon the situation. Please see O.C.G.A. §§ 10-5-2(a) (15), 10-5-3(b). You should review the de minimus exemption found at 10-5-3(b). If the investment adviser representative is employed by a federal covered adviser and the investment adviser representative does not have a “place of business” in Georgia, the registration of the investment adviser representative may not be required. If you are unclear, you should consult your own legal counsel.
3. Is there a de minimus exception?
Yes. An investment adviser, federal covered adviser or investment adviser representative who during the preceding 12 months has had fewer than six Georgia clients need not register with the Securities Division. Please see O.C.G.A. § 10-5-3(b).
4. Do I have to file Part II of the Form ADV when registering or making a notice filing?
If you are a federal covered adviser, you do not have to file Part II of the Form ADV unless the Securities Division requests that you file Part II of the Form ADV. You will have 5 days to electronically file Part II of the Form ADV after such form is requested by the Securities Division. Please see Georgia Regulation 590-4-8-.20(2).
If you are a state investment adviser, when registering, you must file Part II of the Form ADV electronically through IARD. Please see Georgia Regulation 590-4-8-.02(2).
5. Does Georgia sponsor individuals for securities exams?
No. Georgia does not sponsor individuals for any securities exams.
6. Are promissory notes considered securities and, if so, do sellers have to be registered?
Generally, yes. The promissory note itself should be registered as a security. Persons or firms selling promissory notes may have to be registered as dealers, salespersons, investment advisers or investment adviser representatives.
7. Does Georgia register solicitors?
Georgia does not have a separate solicitation registration provision. However, it is unlawful for a solicitor to be paid a fee with respect to solicitation activities in a manner which does not comply with Rule 206 (4)-3 under the Federal Investment Advisers Act of 1940. Please see Georgia Regulation 590-4-8-.17 (1)(m).
Notices to Registered Investment Advisers
Pursuant to Regulation 590-4-2-.08, the Commissioner now requires applicants to submit criminal history reports when applying for registration as a salesperson, limited salesperson, designated salesperson, investment adviser, federal covered adviser, or investment adviser representative.
590-4-2-.08 Criminal History Access. Each applicant filing an application to become a salesperson, limited salesperson, designated salesperson, investment adviser, federal covered adviser, or investment adviser representative shall submit a complete set of his or her fingerprints taken by an authorized law enforcement officer to the Georgia Bureau of Investigation, to the Federal Bureau of Investigation, or through the CRD for state and federal processing. The Commissioner and his or her staff are authorized to review the criminal history record information generated by the processing of fingerprints. The Commissioner may promulgate rules and regulations for the administration of this provision.
Authority O.C.G.A. §§ 10-5-3, 10-5-10(d) and 10-5-11.
The above release can be found here.