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.
Please let us know if you have any questions on this article or if you are thinking of starting a hedge fund in New Mexico. Other related hedge fund law articles include:
- Virginia Hedge Fund Law
- Starting a Hedge Fund
- Start up Hedge Fund Managers – Recommended Articles
- Start Up Hedge Fund Timeline
- Hedge Fund Managers
- How to register as an Investment Advisor
- Important Information for Registered Investment Advisors
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Definition of Investment Advisor in New Mexico
The New Mexico definition of investment advisor is the same as provided in the Uniform Securities Act and there is not an applicable exemption or exclusion for a hedge fund manager. The defintion follows:
M. “investment adviser”:
(1) means a person who, for compensation, engages in the business of advising others as to the value of securities or as to the advisability of investing in, purchasing or selling securities, or who, for compensation and as a part of a regular business, issues or promulgates analyses or reports concerning securities; and
(2) does not include: (a) an investment adviser representative; (b) a depository institution when acting on its own account or when exercising trust or fiduciary powers permitted for such depository institutions under applicable state or federal laws and regulations providing for the organization, operation, supervision and examination of such depository institution; (c) a lawyer, accountant, engineer or teacher whose performance of these services is solely incidental to the practice of the person’s profession; (d) a broker-dealer whose performance of the investment advisory services is solely incidental to the conduct of business as a broker-dealer and who receives no special compensation for the investment advisory services; (e) a publisher, employee or columnist of a newspaper, news magazine or business or financial publication, or an owner, operator, producer or employee of a cable, radio or television network, station or production facility if, in either case, the financial or business news published or disseminated is made available to the general public and the content does not consist of rendering advice on the basis of the specific investment situation of each client; or (f) any other person as the director by rule or order designates;
Various Fees in New Mexico
Registration of Securities, Claims of Exemption from Registration, and Notice Filings
Reg. D, Rule 506 Federal Notice Filing Fee $350
Amendment to Change Name of Issuer $50
Accredited Investor Claim of Exemption Rule 12 NMAC 11.4.7.2.17 $350
Licensure of Broker-Dealers, Investment Advisers and their Representatives
*Broker-Dealer Licensing Application and Renewal Fees $300
Investment Adviser Licensing Application, Renewal and Notice Filing Fees (State Licensed or Federally Licensed) $300
*Broker-Dealer and Investment Adviser Representative Licensing and Renewal Fees $40
Broker Dealer and Investment Adviser Name Change Fees $50
*Mass Transfer Fee (per representative) $35
Issuer Sales Representative Licensing Application and Renewal Fees $40
* Broker-dealers and their representatives that are members of the NASD submit payment directly to the NASD.
Miscellaneous Fees
Interpretive Opinion and No Action Letters $300