In the article Connecticut Hedge Fund Registration Exemption, we discussed that certain states like Connecticut provide administrative orders allowing hedge fund managers an exemption from the registration provisions under certain circumstances.

Similarly certain states have provided a similar exemption to hedge fund managers through the securities commission rule making process.  For example, California Rule 260.204.9 provides that hedge fund managers are exempt from registration with the California Securities Commission if (i) the manager has $25 million or more in assets under management and (ii) has less than 15 clients (a hedge fund counts as a single client).  As with all exemptions from investment advisor registration, the hedge fund manager must make sure that it does not hold itself out as an investment advisor.  The California Rule also provides an exemption for managers of venture capital funds. Continue reading →